SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-26840
Telewest Communications plc
(Exact Name of Registrant as Specified in its Charter)
England and Wales N.A.
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Genesis Business Park
Albert Drive, Woking
Surrey, GU21 5RW
United Kingdom
Telephone number: 001 44 1483 750 900
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days Yes X No .
At June 30, 1996, 927,010,883 ordinary shares of 10p each were outstanding.
<PAGE>
PART 1 ------- FINANCIAL INFORMATION
ITEM 1 ------ FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
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TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
3 months 3 months 3 months 6 months 6 months 6 months
ended ended ended ended ended ended
June 30, June 30, June 30, June 30, June 30, June 30,
1996 1996 1995 1996 1996 1995
(note 1) (note 1)
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Cable television $ 44,722 (pound) 28,799 (pound) 13,369 $ 88,317 (pound) 56,872 (pound) 25,873
Telephony - residential 45,576 29,349 10,595 89,018 57,324 20,205
Telephony - business 12,507 8,054 3,654 23,654 15,232 7,137
Other ((pound)814 and(pound)571
in 1996 and 1995 from related parties) 3,289 2,118 1,351 6,292 4,052 2,185
----------- ---------- ------------- ----------- ---------- -----------
106,094 68,320 28,969 207,281 133,480 55,400
----------- ---------- ------------- ----------- ---------- -----------
OPERATING COSTS AND EXPENSES
Programming (24,017) (15,466) (6,158) (47,767) (30,760) (11,975)
Telephony (20,318) (13,084) (4,248) (39,315) (25,317) (9,515)
Selling, general, and administrative
(including(pound)1,216 and(pound)1,349
in 1996 and 1995 from related parties) (66,973) (43,128) (25,945) (131,234) (84,509) (46,200)
Depreciation (44,427) (28,609) (11,303) (84,902) (54,673) (23,259)
Amortization of goodwill (10,201) (6,569) (524) (20,209) (13,014) (1,049)
----------- ---------- ------------- ----------- ---------- -----------
(165,936) (106,856) (48,178) (323,427) (208,273) (91,998)
----------- ---------- ------------- ----------- ---------- -----------
OPERATING LOSS (59,842) (38,536) (19,209) (116,146) (74,793) (36,598)
OTHER INCOME/(EXPENSE)
Interest income ((pound)846 and(pound)660
in 1996 and 1995 from related parties) 7,246 4,666 3,062 17,830 11,482 6,065
Interest expense and similar charges (43,925) (28,286) (1,474) (81,173) (52,272) (2,453)
Unrealized loss on interest rate swaps - - (2,688) - - (5,249)
Foreign exchange losses, net (48,143) (31,002) - (74,024) (47,668) -
Share of net losses of affiliates (6,109) (3,934) (3,217) (11,633) (7,491) (5,638)
Gain on disposal of assets 185 119 36 245 158 36
Minority interests in profits of
consolidated subsidiaries, net (57) (37) (50) (84) (54) (14)
Other, net - - (5) - - -
----------- ---------- ------------- ----------- ---------- -----------
LOSS BEFORE INCOME TAXES (150,645) (97,010) (23,545) (264,985) (170,638) (43,851)
Income tax expense (109) (70) (2) (138) (89) (9)
----------- ---------- ------------- ----------- ---------- -----------
NET LOSS $ (150,754) (pound)(97,080) (pound)(23,547) $ (265,123)(pound)(170,727) (pound)(43,860)
=========== ========== ============= =========== ========== ===========
LOSS PER ORDINARY SHARE
(DOLLARS/POUND) (NOTE 5) $ (0.16) (pound) (0.10) (pound) (0.03) $ (0.29)(pound) (0.18) (pound) (0.05)
=========== ========== ============= =========== ========== ===========
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
1
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
June 30, June 30, December 31,
1996 1996 1995
(note 1)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 348,443 (pound) 224,382 (pound) 464,818
Trade receivables (net of allowance for doubtful accounts of(pound)5,427
and(pound)4,695) 42,719 27,509 23,123
Other receivables 45,986 29,613 25,657
Prepaid expenses 6,965 4,485 6,133
Investments in affiliates, accounted for under the equity method, and
related receivables 116,586 75,076 80,703
Other investments, at cost 39,857 25,666 20,666
Property and equipment (less accumulated depreciation of(pound)235,935
and(pound)182,142) 1,917,189 1,234,586 1,063,808
Goodwill (less accumulated amortization of(pound)24,772 and(pound)11,758) 780,396 502,541 495,881
Other assets (less accumulated amortization of(pound)1,538 and(pound)742) 127,664 82,210 108,931
----------- ----------- ------------
TOTAL ASSETS $ 3,425,805 (pound)2,206,068 (pound)2,289,720
=========== =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 53,634 (pound) 34,538 (pound) 40,402
Other liabilities 216,932 139,695 103,824
Debt 1,281,209 825,043 792,265
Capital lease obligations 68,848 44,335 30,314
----------- ----------- ------------
TOTAL LIABILITIES 1,620,623 1,043,611 966,805
----------- ----------- ------------
Minority interests 343 221 167
----------- ----------- ------------
Shareholders' equity
Convertible preference shares, 10 pence par value;
661,000,000 shares authorized in 1996 and 1995;
496,066,708 shares issued and outstanding in 1996 and 1995 77,035 49,607 49,607
Ordinary shares, 10 pence par value;
2,010,000,000 shares authorized in 1996 and 1995;
927,010,883 and 919,963,400 shares issued and outstanding
in 1996 and 1995, respectively 143,955 92,701 91,996
Additional paid-in capital 2,068,677 1,332,136 1,322,971
Accumulated deficit (482,088) (310,444) (139,717)
----------- ----------- ------------
1,807,579 1,164,000 1,324,857
Ordinary shares held in trust for the Telewest Restricted Share Scheme (2,740) (1,764) (2,109)
----------- ----------- ------------
TOTAL SHAREHOLDERS' EQUITY 1,804,839 1,162,236 1,322,748
----------- ----------- ------------
Commitments and contingencies (note 6)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,425,805 (pound)2,206,068 (pound)2,289,720
=========== =========== ============
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
2
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
6 months 6 months 6 months
ended ended ended
June 30, June 30, June 30,
1996 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (265,123) (pound) (170,727) (pound) (43,860)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 84,902 54,673 23,259
Amortization of goodwill 20,209 13,014 1,049
Amortization of deferred financing costs and issue
discount on senior discount debentures 60,016 38,648 -
Unrealized loss on foreign currency translation 74,024 47,668 -
Unrealized loss on interest rate swap - - 5,249
Share of losses of affiliates 11,633 7,491 5,638
Gain on disposals of assets (245) (158) (36)
Minority interests in profits 84 54 14
Changes in operating assets and liabilities,
net of effect of acquisition of subsidiaries:
Change in receivables (15,965) (10,281) (3,955)
Change in prepaid expenses 2,519 1,622 (966)
Change in accounts payable (11,369) (7,321) (6,113)
Change in other liabilities 29,204 18,806 7,489
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (10,111) (6,511) (12,232)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property and equipment (304,954) (196,378) (126,487)
Cash paid for acquisition of subsidiaries (21,893) (14,098) -
Additions to other investments (7,765) (5,000) (9,262)
Proceeds from disposals of assets 1,345 866 130
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (333,267) (214,610) (135,619)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for credit facility arrangement costs (27,611) (17,780) -
Cash paid for debenture issue costs (853) (549) -
Cash paid for share issue costs - - (6,141)
Capital element of finance lease repayments (1,335) (860) (359)
----------- ----------- -----------
NET CASH USED IN FINANCING ACTIVITIES (29,799) (19,189) (6,500)
----------- ----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (373,177) (240,310) (154,351)
Effect of exchange rate changes on cash and
cash equivalents (196) (126) -
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 721,816 464,818 248,002
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 348,443 (pound) 224,382 (pound) 93,651
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION :
Cash paid for interest during the period $ 22,056 (pound) 14,203 (pound) 2,295
=========== =========== ===========
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
3
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE ADDITIONAL
PREFERENCE ORDINARY SHARES HELD PAID-IN ACCUMULATED
SHARES SHARES IN TRUST CAPITAL DEFICIT TOTAL
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 (pound)49,607(pound)91,996(pound)(2,109) (pound)1,322,971(pound)(139,717) (POUND)1,322,748
Issue of shares - 705 - 9,165 - 9,870
Accrued employee compensation relating to
the Telewest Restricted Share Scheme - - 345 - - 345
Net loss for the period to June 30, 1996 - - - - (170,727) (170,727)
------------------------------------------------------------------------------------------
BALANCE AT JUNE 30, 1996 49,607 92,701 (1,764) 1,332,136 (310,444) 1,162,236
==========================================================================================
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
4
<PAGE>
TELEWEST COMMUNICATIONS PLC
US GAAP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Telewest Communications plc (the "Company") was incorporated on October
20, 1994 under the laws of England and Wales. On October 2, 1995, the
Company acquired the whole of the issued share capital of Telewest
Communications Cable Limited, then called TeleWest Communications plc
("Old Telewest"), in exchange for the issue of fully paid up shares of
the Company pursuant to a court-approved scheme of arrangement (the
"Scheme of Arrangement") made between Old Telewest, the Company and the
shareholders of Old Telewest. Details regarding the organization and
history of Old Telewest and the Scheme of Arrangement can be found in
the Company's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the Securities and Exchange Commission (the "1995
Annual Report").
On October 3, 1995, immediately following the completion of the Scheme
of Arrangement, the Company acquired the entire issued share capital of
SBC CableComms (UK) ("SBCC"), a company that holds cable television and
telephony interests in the United Kingdom ("UK"), from its former
shareholders in exchange for fully paid up shares of the Company.
Details regarding the acquisition can be found in the 1995 Annual
Report.
The unaudited condensed consolidated financial statements of the
Company and its majority owned subsidiaries (and, where appropriate,
their predecessor companies, collectively, the "Telewest Group") have
been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations.
As the currency in which the Company operates is UK pounds sterling and
the economic environment in which the Company operates is the UK, the
financial statements are stated in pounds sterling ((pound)). Merely
for convenience, the financial statements contain translations of
certain pounds sterling amounts into US dollars at $1.5529 per
(pound)1.00, the Noon Buying Rate of the Federal Reserve Bank of New
York on June 28, 1996.
2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial statements as of and for the
periods ended June 30, 1995 and 1996 are unaudited; however, in the
opinion of the management, such statements include all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the results of operations for the interim periods
presented. The results of operations for any interim period are not
necessarily indicative of the results for the full year. The unaudited
condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the 1995 Annual Report.
3. ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS
The Company uses foreign currency option contracts which permit, but do
not require, the Company to exchange foreign currencies at a future
date with another party at a contracted exchange rate. The Company also
enters into combined foreign currency and interest rate swap contracts
("Foreign Currency Swaps") under which the Company exchanges principal
amounts of foreign currencies with another party at an agreed exchange
rate and, at maturity, re-exchanges the principal amounts at an
exchange rate agreed at the outset of the transaction. Over the term of
the Foreign Currency Swaps, the Company and the swap counterparty also
exchange payments equivalent to interest in different currencies in
respect of the principal amounts exchanged. The foreign currency
options and Foreign Currency Swaps are used to hedge against adverse
changes in foreign currency exchange rates associated with certain
obligations denominated in foreign currency.
5
<PAGE>
TELEWEST COMMUNICATIONS PLC
US GAAP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS (CONTINUED)
The foreign currency option and the Foreign Currency Swaps are recorded
on the balance sheet in "other assets" or "other liabilities" at their
fair value at the end of each reporting period with changes in their
fair value during the reporting period being reported as part of the
foreign exchange gain or loss in the statement of operations. Such
gains and losses are offset against foreign exchange gains and losses
on the obligations denominated in foreign currencies which have been
hedged.
4. DEPRECIATION
The estimated useful lives of certain assets within system electronics
and cable and ducting were reassessed with effect from January 1, 1996
and have been changed from 10 years and 30 years to 8 years and 25
years, respectively. These assets will be written off over their
revised estimated remaining lives. The change in asset lives does not
have a material effect on the current period financial statements.
5. LOSS PER ORDINARY SHARE
Loss per ordinary share is based on the weighted average number of
ordinary shares outstanding for the period of 923,487,142 shares.
6. COMMITMENTS AND CONTINGENCIES
The Company is party to various legal proceedings in the ordinary
course of business which it does not believe will result, in aggregate,
in a material adverse effect on its balance sheet position and its
results.
7. BANK FINANCING
A subsidiary of the Company is party to a senior secured credit
facility which, subject to satisfaction of certain conditions, will be
available for future drawdowns. The facility will be available to
finance the capital expenditure, working capital, and other related
requirements for the construction and operation of all the Company's
owned and operated franchises, to pay cash interest on the Company's
unsecured debentures, to fund the repayment of existing secured
borrowings in respect of the London South, Avon and Scotland Franchise
Areas, to fund loans to or investments in affiliated companies, to bid
for or purchase, and subsequently construct, licences or franchises
which may become available and to refinance advances and the payment of
interest, fees and expenses in respect of the senior secured credit
facility.
The facility is divided into two tranches: the first portion (Tranche
A) will be available on a revolving basis for up to (pound)300 million,
reducing to (pound)100 million by June 30, 1998 with full repayment by
December 31, 1998; the second portion (Tranche B) will be available on
a revolving basis concurrently with Tranche A for an amount up to 6.5
times the trailing, rolling six month annualized consolidated net
operating cash flow, gradually reducing throughout the period of the
facility to 4 times by January 1, 2000. Thereafter, the amount
outstanding under the facility converts to a term loan amortizing over
5 years. The aggregate drawing at any time under both tranches cannot
exceed (pound)1.2 billion.
Borrowings under the facility are secured by assets including the
partnership interests and shares of subsidiaries of the Company and
bear interest at 2.25% above LIBOR for Tranche A and between 0.5% and
1.875% above LIBOR for Tranche B. The facility contains financial and
other covenants.
6
<PAGE>
ITEM 2----MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The financial information contained in this Report on Form 10-Q is prepared in
accordance with US GAAP. In accordance with UK securities regulations, the
Company also prepares financial statements in accordance with UK GAAP. The UK
GAAP financial statements for the period covered by this Report are contained in
Exhibit 99 to this Report.
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the management discussion and
analysis contained in the 1995 Annual Report.
SAFE HARBOR STATEMENT UNDER THE US PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: The discussion and analysis below includes certain forward looking
statements which involve risks and uncertainties that could lead to actual
results that are significantly different from those anticipated by the Company.
These risks and uncertainties relate to, among other things, the extent consumer
preference develops for cable television over other methods of providing in-home
entertainment and for the Company as a viable alternative to British
Telecommunications plc ("BT") and Mercury Communications Limited ("Mercury") as
a provider of telephony service; the ability of the Company to manage growth and
expansion; the ability of the Company to construct its network in a cost
efficient and timely manner; the ability of the Company to raise additional
financing if there is a material adverse change in the Company's anticipated
revenues or expenses; the ability of the Company to respond to changes or
increases in competition and adverse changes in government regulation; the
extent programming is available at reasonable costs; adverse changes in the
pricing of telephony interconnection; disruptions in supply of services and
equipment, and the performance of the Affiliated Companies (which are not
controlled by the Company).
LIQUIDITY AND CAPITAL RESOURCES
On May 22, 1996, the Company (through a directly wholly owned subsidiary)
entered into a (pound)1.2 billion senior secured credit facility with a
syndicate of banks (the "Senior Secured Facility"). The Senior Secured Facility
will, subject to satisfaction of certain conditions, be used to finance the
capital expenditure, working capital requirements and other permitted related
activities for the construction and operation of directly or indirectly wholly
owned telephony and television franchises of the Company; to fund the payment of
cash interest on the Senior Debentures and Senior Discount Debentures (as
defined below); to fund the repayment of existing secured borrowings of the
Company in respect of the London South, Avon and Scotland Regional Franchise
Areas; to fund loans to or investments in affiliated companies; to fund the
acquisition, and subsequent construction, of local delivery
operators/franchises; and to refinance advances and the payment of interest,
fees and expenses in respect of the Senior Secured Facility. The Senior Secured
Facility is divided into two tranches, the first will be available on a
revolving basis for up to (pound)300 million, reducing to (pound)100 million by
June 30, 1998 with full repayment by December 31, 1998. The second tranche will
be available on a revolving basis concurrently with the first tranche for an
amount up to 6.5 times the trailing, rolling six month annualized consolidated
net operating cash flow, gradually reducing throughout the period of the
facility to 4 times by January 1, 2000. Thereafter, the amount outstanding under
the facility converts to a term loan amortizing over 5 years. The aggregate
drawing at any time under both tranches cannot exceed (pound)1.2 billion.
Borrowings under the Senior Secured Facility are secured by assets including the
partnership interests and shares of subsidiaries of the Company and bear
interest at 2.25% above LIBOR for the first tranche and between 0.5% and 1.875%
above LIBOR for the second tranche. The Company's ability to borrow under the
Senior Secured Facility is subject to, among other things, its compliance with
the financial and other covenants contained therein, and the failure to comply
with such covenants could result in all such amounts outstanding under the
facility becoming due and payable. The Company expects that the first drawdown
under the Senior Secured Facility will be made in the fourth quarter of 1996.
On October 3, 1995, the Company raised (pound)734 million through the issue of
$300 million principal amount of 9 5/8% Senior Debentures due 2006 (the "Senior
Debentures") and $1,536 million principal amount at maturity of 11% Senior
Discount Debentures due 2007 (the "Senior Discount Debentures"). Interest on the
Senior Debentures is payable semi-annually; interest on the Senior Discount
Debentures will be payable semi-annually commencing on April 1, 2001. On October
2, 1995, the Company entered into certain currency hedge arrangements to reduce
its exposure to exchange rate fluctuations on the debentures between pounds
sterling and US dollars through October 1, 2000. The aggregate cost of such
arrangements was (pound)88 million. The proceeds of the issue have been and will
be used by the Company to fund general working capital, capital expenditures,
additional investments, if any, in affiliated companies or other companies
engaged in the cable/telecommunications business, any television or licensing
business and any programming guide or telephony directory business. The proceeds
of the issue were also used to purchase the currency hedge arrangements
described above and to repay a credit facility entered into by SBCC.
7
<PAGE>
The Company's principal hedge instrument, a foreign currency option, provides
protection against exchange rate fluctuations on the Senior Discount Debentures
up to the early redemption date of October 1, 2000, down to a rate of $1.452:
(pound)1, and allows the Company to benefit from positive exchange rate
movements. The Company has also entered into one of the Foreign Currency Swaps
to hedge its exposure to adverse changes in exchange rates associated with the
Senior Debentures up to the early redemption date of October 1, 2000. Under the
terms of the Foreign Currency Swap, the Company has exchanged, with the swap
counterparty, an amount equal to the US dollar principal amount of the Senior
Debentures in return for pounds sterling, and at maturity, will re-exchange the
currency amounts. The Company and the swap counterparty also exchange payments
equivalent to interest in respect of the currency amounts exchanged. Both
hedging instruments are marked to their market value at the end of each
reporting period and exchange gains and losses on the debentures are recorded at
such time. As a result, the Company's results may be materially influenced by
future exchange rate movements.
Cash and deposit balances at June 30, 1996 were (pound)224 million.
The Company incurred a net cash outflow from operating activities of (pound)12.2
million and (pound)6.5 million in the six month period ended June 30, 1995 and
1996, respectively, reflecting the improvement in the Company's operating
results, excluding non cash items, in the six month period ended June 30, 1996
from the six month period ended June 30, 1995.
The Company incurred net cash outflow from investing activities of (pound)135.6
million and (pound)214.6 million in the six month period ended June 30, 1995 and
1996, respectively. The Company's principal investing activities continue to be
the construction of the network, providing debt and equity financing to the
Affiliated Companies and other investments, and in the six month period ended
June 30, 1996, the acquisition of a franchise covering the Worcester area from
Bell Cablemedia plc for (pound)9.8 million to continue the expansion of the
network. The Company expects to continue to have significant capital
requirements to fund the cost of constructing the network for the foreseeable
future.
Cash used in financing activities was (pound)6.5 million and (pound)19.2 million
in the six month period ended June 30, 1995 and 1996, respectively. Cash used in
financing activities consisted principally of professional fees relating to
share issue costs outstanding from 1994 which were paid in the six month period
ended June 30, 1995 and loan arrangement and agency fees of (pound)17.8 million
relating to the (pound)1.2 billion Senior Secured Facility which were paid in
the six month period ended June 30, 1996.
At June 30, 1996, the Company's broadband network had passed approximately 57%
of the homes in its owned and operated franchise areas as compared to 46% of
homes in its owned and operated franchises at June 30, 1995. Total capital
expenditure in the six month period ended June 30, 1996 was (pound)230.2 million
as compared with (pound)125.5 million in the six month period ended June 30,
1995. The increase in expenditure during 1996 was largely a result of the
construction of the network in the former SBCC franchises which were acquired in
October 1995.
The Company is obligated under the terms of its telecommunications licences to
construct its network to pass a specified number of premises by prescribed
dates. The Company expects to exceed milestone obligations under its
telecommunications licences (as originally specified or as modified subsequent
thereto). If such milestones are not met, the Company may be subject to
enforcement action from regulatory authorities which, if not complied with,
could result in revocation of the Company's telecommunications licences.
Although the Company from time to time has not met certain milestones, it has
sought and received appropriate milestone modifications from the Director
General, and currently is negotiating for modifications of the milestones for a
limited number of licenses.
The Company expects to make capital expenditures of an aggregate of
approximately (pound)500 million during 1996.
The Company currently expects that the anticipated funding requirements (after
taking into account current cash and deposit balances, together with anticipated
revenues) to substantially complete the construction of the owned and operated
network (including the recently acquired franchises of Worcester and Southport),
to fund the Company's operations, to upgrade older portions of the network, to
develop and introduce certain new products, and to pay interest on the Company's
debt will be approximately (pound)1 billion. The Company expects that such
funding will be provided by the Senior Secured Facility although there can be no
assurance that the Company will not elect to use alternative funding sources or
that the Company's current anticipated funding requirements will be in line with
expectations.
8
<PAGE>
SUMMARY OF OPERATIONS (THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1996)
The Company's consolidated revenue increased by 136% from (pound)29.0 million in
the three month period ended June 30, 1995 to (pound)68.3 million in the three
month period ended June 30, 1996 and by 141% from (pound)55.4 million in the six
month period ended June 30, 1995 to (pound)133.5 million in the six month period
ended June 30, 1996 . The results of the Company for the first six months of
1996 include the results of the former SBCC franchises which were acquired in
October 1995; the inclusion of the results of the SBCC franchises accounted for
84% of the 136% increase and 61% of the 141% increase in revenue for the three
and six month period, respectively, ended June 30, 1996, over the corresponding
periods in 1995. The remainder of the increase in revenue over the corresponding
periods in 1995 was principally attributable to the larger subscriber base
created by the Company's continuing network construction in the Old Telewest
franchises.
CABLE TELEVISION REVENUE
Cable television revenue increased by 115% from (pound)13.4 million in the three
month period ended June 30, 1995 to (pound)28.8 million in the three month
period ended June 30, 1996 and by 120% from (pound)25.9 million in the six month
period ended June 30, 1995 to (pound)56.9 million in the six month period ended
June 30, 1996. The increase was primarily attributable to a 111% increase (from
198,642 to 418,341) and a 116% increase (from 190,829 to 411,466) in the average
number of customers in the three and six month periods, respectively, ended June
30, 1996 compared to the corresponding periods ended June 30, 1995. The increase
in the average number of customers results from an increase in the number of
homes passed and marketed in the Old Telewest franchises (from 974,006 at June
30, 1995 to 1,275,236 at June 30, 1996) and from the inclusion in 1996 of the
former SBCC franchises which contributed 159,805 customers at June 30, 1996.
Penetration decreased slightly from 21.6% as at March 31, 1996 to 21.1% as at
June 30, 1996 and from 21.8% as at March 31, 1995 to 21.2% as at June 30, 1995.
Penetration decreased from 21.9% at December 31, 1995 to 21.1 % at June 30, 1996
and from 22.2% at December 31, 1994 to 21.2% at June 30, 1995. Annualized
quarterly churn in the three month period ended June 30, 1996 was 35.3% and
churn in the twelve month period ended June 30, 1996 was 36.4%.
In previous quarters, the Company has calculated churn by including in the
total of those customers who disconnect within the period, those who transfer
(customers who move their cable television/residential telephony service from
one premise to another within an owned and operated Company franchise). While
this has had no effect on the calculation of penetration, which is based on
period end figures, it has meant that churn has been overstated. Like
other companies within the UK cable industry, and commencing with the current
quarter, the Company has calculated churn to exclude those customers who
transfer. It is not possible to recalculate 1995 churn rates on the revised
basis and hence no comparative figures for 1995 can be given. The 1996 and 1995
churn rates calculated on the old basis (ie to include in churn those customers
who transfer) are as follows: annualized quarterly churn decreased from 48.4% in
the three month period ended June 30, 1995 to 39.1% in the three month period
ended June 30, 1996 and churn also decreased from 45.7% in the twelve month
period ended June 30, 1995 to 39.5% in the twelve month period ended June 30,
1996.
Average monthly revenue per cable television customer increased from
(pound)22.52 in the three month period ended June 30, 1995 to (pound)22.95 in
the three month period ended June 30, 1996 and from (pound)22.58 in the six
month period ended June 30, 1995 to (pound)23.04 in the six month period ended
June 30, 1996, resulting from an increase in the basic channel charge
implemented in the fourth quarter 1995 and the additional revenues generated
from the UK's first national pay-per-view programming aired in March 1996.
TELEPHONY REVENUE
Telephony revenue increased by 163% from (pound)14.2 million in the three month
period ended June 30, 1995 to (pound)37.4 million in the three month period
ended June 30, 1996 and by 166% from (pound)27.3 million in the six month period
ended June 30, 1995 to (pound)72.6 million in the six month period ended June
30, 1996.
Residential telephony revenue increased by 177% from (pound)10.6 million in the
three month period ended June
9
<PAGE>
30, 1995 to (pound)29.3 million in the three month period ended June 30, 1996
and by 184% from (pound)20.2 million in the six month period ended June 30, 1995
to (pound)57.3 million in the six month period ended June 30, 1996. Business
telephony revenue increased by 120% from (pound)3.7 million in the three month
period ended June 30, 1995 to (pound)8.1 million in the three month period ended
June 30, 1996 and by 113% from (pound)7.1 million in the six month period ended
June 30, 1995 to (pound)15.2 million in the six month period ended June 30,
1996.
The increase in residential telephony revenue in the three and six month periods
ended June 30, 1996 compared to the corresponding periods ended June 30, 1995
was primarily due to a 194% increase (from 164,377 to 482,907) and a 207%
increase (from 151,858 to 465,558) in the average number of residential lines in
the three and six month periods, respectively, ended June 30,1996 compared to
the corresponding periods ended June 30, 1995. The increase in the average
number of residential lines results from an increase in the number of homes
passed and marketed in the Old Telewest franchises (from 772,435 at June 30,
1995 to 1,142,954 at June 30, 1996) and from the inclusion in 1996 of the former
SBCC franchises, which represented 225,476 lines at June 30, 1996. The increase
in the average number of residential telephony lines was partially offset by a
decrease in the average monthly revenue per residential line, which decreased by
5% from (pound)21.46 in the three month period ended June 30, 1995 to
(pound)20.28 in the three month period ended June 30, 1996, and decreased by 7%
from (pound)22.15 in the six month period ended June 30, 1995 to (pound)20.52 in
the six month period ended June 30, 1996. The decrease in the average monthly
revenue per line was mainly attributable to price reductions in per minute call
charges in response to price cutting by BT, the Company's main competitor in
residential telephony. The Company intends to continue reducing per minute call
tariffs and to seek to mitigate the revenue impact of these reductions through
higher line rentals and increased call volumes resulting from increased
marketing.
Residential telephony penetration decreased from 26.7% at March 31, 1996 to
26.4% at June 30, 1996 and decreased from 22.9% at March 31, 1995 to 22.8% at
June 30, 1995. Penetration increased from 26.0% at December 31, 1995 to 26.4 %
at June 30, 1996 and from 22.1% at December 31, 1994 to 22.8% at June 30, 1995.
Annualized quarterly churn per line was 20.6% in the three month period ended
June 30, 1996 and churn per line for the twelve month period ended June 30, 1996
was 20.2%.
As set out on page 9, the Company has modified its calculation of churn to
exclude those customers who transfer. The 1996 and 1995 churn rates calculated
on the old basis (ie to include in churn customers who transfer) are as follows:
annualized quarterly churn per line increased from 21.3% in the three month
period ended June 30, 1995 to 24.4% in the three month period ended June 30,
1996 and churn per line also increased from 20.7% in the twelve month period
ended June 30, 1995 to 23.3% in the twelve month period ended June 30, 1996.
The increase in business telephony revenue in the three and six month periods
ended June 30, 1996 compared to the corresponding periods ended June 30, 1995
was primarily attributable to a 148% increase (from 19,734 to 48,956) and a 151%
increase (from 18,232 to 45,805) in the average number of business telephony
lines in the three and six month periods, respectively, ended June 30 1996,
which was partially offset by a decrease in the average monthly revenue per
business line, which decreased by 9% from (pound)60.09 in the three month period
ended June 30, 1995 to (pound)54.87 in the three month period ended June 30,
1996, and decreased by 14% from (pound)64.43 in the six month period ended June
30, 1995 to (pound)55.42 in the six month period ended June 30, 1996. The
decrease in the average monthly revenue per line was attributable to price
reductions in per minute call charges in response to competition and increased
sales of Centrex, a new business telecommunications product, which has a lower
average monthly revenue per line.
Other revenue increased by 57% and 85% in the three and six month periods,
respectively, ended June 30, 1996 compared to the same periods in 1995, and is
derived primarily from management services provided to Affiliated Companies,
cable publications and network management services provided to other operators,
and advertising sales.
OPERATING COSTS AND EXPENSES
The Company's consolidated operating costs and expenses increased by 122% from
(pound)48.2 million in the
10
<PAGE>
three month period ended June 30, 1995 to (pound)106.9 million in the three
month period ended June 30, 1996 and increased by 126% from (pound)92.0 million
in the six month period ended June 30, 1995 to (pound)208.3 million in the six
month period ended June 30, 1996.
Programming fees are the largest component of the Company's operating costs in
providing cable television services. The Company obtains most of its programming
under contracts which provide for payments based upon the number of customers.
As a percentage of cable television revenues, programming costs increased from
46% in both the three month period and the six month period ended June 30, 1995
to 54% for both corresponding periods in 1996, as a result of more channels,
such as European Business News and the Sci-Fi Channel, being provided to
customers in the basic cable television package and the inclusion, in the
results for 1996, of the former SBCC franchises which have higher per channel
programming costs.
As a percentage of telephony revenue, telephony operating costs increased from
30% in the three month period ended June 30, 1995 to 35% in the three month
period ended June 30, 1996 and remained stable at 35% for both six month periods
ended June 30, 1995 and 1996. Interconnection charges are the largest component
of the Company's telephony operating costs in providing telephony services.
Interconnection charges for the three month period ended June 30, 1995 were
reduced by credits relating to interconnection charges of earlier periods;
credits of such magnitude were not received in the corresponding period ending
June 30, 1996. The increase in the three month period ended June 30, 1996 over
the corresponding period in 1995 was also due to the inclusion within telephony
costs in 1996 of certain expenses which had been classified as selling, general
and administrative expenses in 1995.
Selling, general and administrative expenses, which include, among other items,
salary and marketing costs, decreased as a percentage of revenue from 90% and
83% in the three and six month periods ended June 30, 1995 to 63% for both
corresponding periods in 1996. The decrease is due to reductions in support
costs as the Company exploits the efficiency gains of its enlarged operations
which have been partially offset by higher customer acquisition costs as the
Company increases its marketing expenditure. The Company expects that its
selling, general and administrative expenses will remain significant as a
percentage of revenue until the Company completes construction of a substantial
proportion of its network. The Company increased its workforce by 76% from 2,586
as at June 30, 1995 to 4,564 as at June 30, 1996 (including 1,373 employees in
the former SBCC franchises). A portion of labor and overhead costs are
capitalised as they relate to the construction of the network. Total labor and
overhead costs capitalised in the three month period ended June 30, 1996
amounted to (pound)9.5 million, compared to (pound)5.0 million in the three
month period ended June 30, 1995 and (pound)18.6 million in the six month period
ended June 30, 1996, compared to (pound)9.7 million in the six month period
ended June 30, 1995.
Depreciation expense increased 153% from (pound)11.3 million in the three month
period ended June 30, 1995 to (pound)28.6 million in the three month period
ended June 30, 1996 and by 135% from (pound)23.3 million in the six month period
ended June 30, 1995 to (pound)54.7 million in the six month period ended June
30, 1996. This increase was principally attributable to capital expenditure
associated with the Company's continuing construction activities, depreciation
recorded by the former SBCC franchises, and a reduction in the estimated useful
lives of certain network assets. Amortization expense increased from (pound)0.5
million in the three month period to June 30, 1995 to (pound)6.6 million in the
three month period to June 30, 1996 and from (pound)1.0 million in the six month
period to June 30, 1995 to (pound)13.0 million in the six month period ended
June 30, 1996, primarily due to the amortization of goodwill arising on the
acquisition of SBCC.
OTHER INCOME (EXPENSE)
The Company's share of the net losses of its Affiliated Companies accounted for
under the equity method, principally Birmingham Cable Corporation Limited and
Cable London plc, was (pound)3.2 million and (pound)3.9 million for the three
month periods ended June 30, 1995 and 1996, respectively and (pound)5.6 million
and (pound)7.5 million for the six month periods ended June 30, 1995 and 1996,
respectively. The performance of the Affiliated Companies was broadly in line
with expectations.
For the three month periods ended June 30, 1995 and 1996, financial expenses
consist primarily of interest
11
<PAGE>
expense of (pound)28.3 million for the three month period ended June 30, 1996
((pound)1.5 million for the three month period ended June 30, 1995), and foreign
exchange losses of (pound)31.0 million for the three month period ended June 30,
1996 ((pound)nil for the three month period ended June 30, 1995) offset in part
by interest income earned on short-term investments and loans to Affiliated
Companies of (pound)4.7 million for the three month period ended June 30, 1996
((pound)3.1 million in the three month period ended June 30, 1995).
For the six month periods ended June 30, 1995 and 1996, financial expenses
consist primarily of interest expense of (pound)52.3 million for the six month
period ended June 30, 1996 ((pound)2.5 million for the six month period ended
June 30, 1995), and foreign exchange losses of (pound)47.7 million for the six
month period ended June 30, 1996 ((pound)nil for the six month period ended June
30, 1995) offset by interest income earned on short-term investments and loans
to Affiliated Companies of (pound)11.5 million for the six month period ended
June 30, 1996 ((pound)6.1 million in the six month period ended June 30, 1995).
Interest expense increased by (pound)26.8 million in the three month period
ended June 30, 1996 and by (pound)49.8 million in the six month period ended
June 30, 1996 compared to the equivalent periods of the preceding year primarily
as a result of the accrued interest expense on the Senior Debentures and the
Senior Discount Debentures issued by the Company in October 1995. The foreign
exchange losses in the six months ended June 30, 1996 arose principally from the
retranslation of the US dollar denominated debentures to pounds sterling using
the June 30, 1996 exchange rate and marking the associated hedging instruments
to their market value at June 30, 1996.
12
<PAGE>
PART II ---- OTHER INFORMATION
ITEM 1 ----LEGAL PROCEEDINGS
None
ITEM 2 ---- CHANGES IN SECURITIES
None
ITEM 3 ---- DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 ---- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 ---- OTHER MATTERS
None
ITEM 6 ---- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
10.66-- Loan Agreement, by and among Telewest Communications Networks
Limited, as borrower, The Bank of New York, CIBC Wood Gundy
plc, Chase Investment Bank Limited, Natwest Markets and The
Toronto-Dominion Bank, as lenders and CIBC Wood Gundy plc, as
agent, dated as of May 22, 1996.
27 -- Telewest Communications plc financial data schedule
99 -- Telewest Communications plc Press Release issued on
August 5, 1996 with respect to results of operations for the
six month period ended June 30, 1996 (including unaudited
consolidated financial statements prepared in accordance with
UK GAAP).
b. Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TELEWEST COMMUNICATIONS PLC
By: /s/ STEPHEN J. DAVIDSON
-----------------------------
Name: Stephen J. Davidson
Title:Acting Chief Executive Officer
(duly authorized signatory and
principal financial officer)
August 14, 1996
14
<PAGE>
EXHIBITS
EXHIBIT
10.66--- Loan Agreement, by and among Telewest Communications Networks
Limited, as borrower, The Bank of New York, CIBC Wood Gundy plc, Chase
Investment Bank Limited, Natwest Markets and The Toronto-Dominion Bank,
as lenders and CIBC Wood Gundy plc, as agent, dated as of May 22, 1996.
27 --- Telewest Communications plc Financial Data Schedule
99 --- Telewest Communications plc Press Release issued on August 5, 1996
with respect to results of operations for the six month period ended
June 30, 1996 (including unaudited consolidated financial statements
prepared in accordance with UK GAAP)
15
EXHIBIT 10.66
Loan Agreement, by and among Telewest Communications Networks Limited, as
borrower, The Bank of New York, CIBC Wood Gundy plc, Chase Investment Bank
Limited, Natwest Markets and The Toronto-Dominion Bank, as lenders and CIBC Wood
Gundy plc, as agent, dated as of May 22, 1996.
<PAGE>
CONFORMED COPY
DATED 22 MAY 1996
LOAN AGREEMENT
for a
(pound)1,200,000,000 Credit Facility
to
TELEWEST COMMUNICATIONS NETWORKS LIMITED
THE BANK OF NEW YORK
CIBC WOOD GUNDY PLC
CHASE INVESTMENT BANK LIMITED
NATWEST MARKETS
and
THE TORONTO-DOMINION BANK
ARRANGERS
CIBC WOOD GUNDY PLC
AGENT
CIBC WOOD GUNDY PLC
SECURITY TRUSTEE
AS AMENDED PURSUANT TO AN AMENDMENT AGREEMENT DATED
31 MAY 1996 AND A SECOND AMENDMENT AGREEMENT
DATED 2 AUGUST 1996
<PAGE>
CONTENTS
1. Purpose and Definitions............................................ 1
2. The Facility....................................................... 25
3. Conditions......................................................... 26
4. Revolving Advances................................................. 27
5. Interest and Interest Periods; alternative interest rates.......... 31
6. Repayment, prepayment and cancellation............................. 35
7. Fees and expenses.................................................. 38
8. Payments and Taxes; accounts and calculations...................... 39
9. Representations and warranties..................................... 43
10. Positive covenants................................................. 52
11. Negative Covenants................................................. 60
12. Financial Covenants................................................ 63
13. Events of Default.................................................. 67
14. Indemnities........................................................ 73
15. Unlawfulness and Increased Costs; Mitigation...................... 74
16. Set-off and Pro Rata Payments...................................... 77
17. Assignment, Substitution and Lending Offices....................... 78
18. Arrangers, Agent and Reference Banks............................... 81
19. Notices and other matters.......................................... 85
20. Lease Financing and Pari Passu Borrowings.......................... 87
21. Governing law and jurisdiction..................................... 87
NYFS03...:\19\77119\0001\1716\AGR8076T.200
<PAGE>
SCHEDULE 1
Part A The Original Charging Subsidiaries
Part B The Original Charging Partnerships
Part C The Original Non-Charging Subsidiaries
Part D The Banks and their Commitments
SCHEDULE 2
Part A Form of Drawdown Notice
Part B Form of Rollover Notice
Part C Form of Conversion Notice
SCHEDULE 3
Documents and evidence required as conditions precedent
SCHEDULE 4
Calculation of Additional Cost
SCHEDULE 5
Form of Substitution Certificate
SCHEDULE 6
Form of Compliance Certificate to be issued by an Authorised Officer of
the Borrower
SCHEDULE 7
Form of Deed of Subordination
SCHEDULE 8
Existing Encumbrances
SCHEDULE 9
The Licences
SCHEDULE 10
Principal Agreements
<PAGE>
THIS AGREEMENT is dated 22 May, 1996
BETWEEN:
(1) TELEWEST COMMUNICATIONS NETWORKS LIMITED as Borrower;
(2) THE SUBSIDIARIES OF THE BORROWER set out in part A of Schedule 1;
(3) THE ASSOCIATED PARTNERSHIPS OF THE BORROWER set out in part B of
Schedule 1;
(4) THE BANK OF NEW YORK, CIBC WOOD GUNDY PLC, CHASE INVESTMENT
BANK LIMITED, NATWEST MARKETS (a division of NATIONAL WESTMINSTER
BANK PLC) and THE TORONTO-DOMINION BANK as Arrangers;
(5) THE BANKS AND FINANCIAL INSTITUTIONS whose names and addresses are set
out in Part D of Schedule 1;
(6) CIBC WOOD GUNDY PLC as Agent; and
(7) CIBC WOOD GUNDY PLC as Security Trustee.
IT IS AGREED as follows:
1. PURPOSE AND DEFINITIONS
1.1 PURPOSE
This Agreement sets out the terms and conditions upon and subject to which all
of the Banks agree, according to their several obligations, to make available to
the Borrower a credit facility of up to (pound)1,200,000,000 to be used (i) to
assist in the financing of the capital expenditure, working capital requirements
and other permitted related activities for the construction and operation of all
the (directly or indirectly) wholly-owned (save for minority interests approved
prior to the date hereof) cable telephony and television franchises of the
Borrower, (ii) to the extent that any amounts are then outstanding under the
London South/Avon Facility or the Scotland Facility, to repay any such amounts
out of the proceeds of the first drawdown hereunder, (iii) to fund the repayment
of existing secured borrowings of the TCN Entities (other than borrowings under
the London South/Avon Facility or the Scotland Facility except as provided in
(ii) above) up to a maximum of (pound)5,000,000 in aggregate, (iv) to fund
Permitted Investments set out in paragraphs (iv) or (vi) of the definition of
Permitted Investments and the loans to TeleWest referred to in paragraph (v) of
the definition of Permitted Investments, (v) to make payments of interest to
TeleWest on loans made to the Borrower by TeleWest in order to enable TeleWest
to pay equivalent cash interest on the Senior Securities and/or to pay the costs
and expenses of TeleWest (up to a maximum of the amount set out in
1
<PAGE>
paragraph (b)(i) of the definition of Permitted Payments), (vi) to make loans to
TCN Entities in order to facilitate the purposes set out in (i) to (v)
(inclusive) above and/or (vii) to repay Advances under Tranche A or Tranche B or
to pay interest, fees and expenses relating to the facility granted pursuant to
this Agreement.
1.2 DEFINITIONS
In this Agreement, unless the context otherwise requires:
"1996 BUDGET" means the budget for the TCN Group for the period commencing on 1
January 1996 and ending on 31 December 1996 in the agreed form;
"ADDITIONAL COST" means in relation to any period a percentage calculated for
such period at an annual rate determined by the application of the formula set
out in Schedule 4;
"ADVANCE" means a Revolving Advance or a Term Advance (as applicable);
"AFFILIATE" means each of Birmingham Cable Corporation Limited (no. 2170379),
Cable London plc (no. 1794264) and The Cable Corporation Limited (no. 2075227)
for so long as the TeleWest does not materially reduce its direct or indirect
voting or economic interest in such company;
"AGENT" means CIBC Wood Gundy plc of Cottons Centre, Cottons Lane, London SE1
2QL or such other person as may be appointed agent for the Banks pursuant to
clause 18.11;
"AGREED BASE CASE" means the base case financial and operational projections for
the TCN Group produced by the Borrower dated 12 April 1996;
"ANNUAL BUDGET" means a budget in respect of the TCN Group for each financial
year containing information of the same type and to the same level of detail as
the 1996 Budget or containing such other information or to such other level of
detail as has, at the relevant time, been approved in writing by the Agent
acting on the instructions of the Majority Banks;
"ARRANGERS" means The Bank of New York of 46 Berkeley Street, London W1X 6AA,
CIBC Wood Gundy plc of Cottons Centre, Cottons Lane, London SE1 2QL, Chase
Investment Bank Limited of 125 London Wall, London EC2Y 5AJ, Natwest Markets (a
division of National Westminster Bank Plc) of 135 Bishopsgate, London EC2M 3UR
and The Toronto-Dominion Bank of Triton Court, 14/18 Finsbury Square, London
EC2A 1DB;
"ASSIGNEE" has the meaning ascribed thereto in clause 17.3;
"ASSOCIATED COMPANY" has the meaning attributed thereto in Section 416 of the
Income and Corporation Taxes Act 1988;
2
<PAGE>
"ASSOCIATED PARTNERSHIP" means, in relation to a company, a partnership that is
controlled by that company, or by that company and one or more of its Associated
Companies together, and a company shall be regarded as having control of a
partnership for those purposes if (directly or indirectly, including through
intermediate Associated Partnerships) it possesses, is entitled to, or is
entitled to acquire:
(a) more than 50% of the assets of the partnership; or
(b) more than 50% of the income of the partnership
or if it (directly or indirectly, including through intermediate Associated
Partnerships) is able to direct how the affairs of the partnership are
conducted;
"AUTHORISED OFFICER" means that officer or officers of the Borrower authorised
to sign Compliance Certificates, Drawdown Notices, Rollover Notices, Conversion
Notices and any other notices, requests or confirmations referred to in this
Agreement or relating to the facility granted pursuant to this Agreement;
"AVON LICENCES" means those licences of TCN Entities details of which are set
out in part A of schedule 9;
"BANKING DAY" means a day (other than Saturday or Sunday) on which dealings in
Sterling deposits are carried on in the London Interbank Market and (if payment
is required to be made on such day) on which banks are open for business in
London;
"BANKS" means the banks and financial institutions listed in Part D of schedule
1 and includes their successors in title, Assignees and Substitutes;
"BOND AND FLOATING CHARGES" means the bond and floating charges, in the agreed
form, to be entered into by each Original Charging Subsidiary which is
incorporated in Scotland;
"BORROWED MONEY" means Indebtedness (including, for the avoidance of doubt, but
without double counting, any guarantees of such Indebtedness) in respect of (i)
money borrowed or raised and debit balances at banks, (ii) any bond, note, loan
stock, debenture or similar debt instrument, (iii) acceptance or documentary
credit facilities, (iv) receivables sold or discounted (otherwise than on a
non-recourse basis), (v) payments for assets or services acquired which are
deferred for a period of 90 days or more after the relevant assets or services
were supplied, (vi) hire purchase contracts, (vii) rental payments under Finance
Leases, (viii) guarantees, bonds, standby letters of credit or other instruments
issued in connection with the performance of contracts and (ix) any other
transaction (including without limitation forward sale or purchase agreements
and issues of redeemable shares) having the commercial effect of a borrowing or
raising of money entered into for the purpose of financing a person's
operational or capital requirements provided that in making any calculation of
Borrowed Money under this Agreement no Indebtedness shall be taken into account
more than once;
3
<PAGE>
"BORROWER" means TeleWest Communications Networks Limited (formerly Mintdrive
Limited) (No. 3071086) whose registered office is at Unit 1, Genesis Business
Park, Albert Drive, Woking, Surrey GU21 5RW;
"BORROWER/TELEWEST TRANSFER AGREEMENTS" means the agreements entered into
between the Borrower and TeleWest pursuant to which the Borrower has acquired
from TeleWest the shares in TeleWest Communications and SBCC in consideration
for which the Borrower has issued shares to TeleWest;
"BT INTER-CONNECT AGREEMENTS" means the agreements referred to in part A of
Schedule 10;
"CABLE INTERNET" means any arrangements put in place between, inter alia,
members of the TCN Group and others for the development and provision of
internet services via the Cable Systems;
"CABLE SYSTEMS" means the telecommunications and television systems constructed
or to be constructed in the areas covered by the Licences and includes any part
of any such system and all modifications, substitutions, replacements, renewals
and extensions made to such systems;
"CHARGING PARTNERSHIPS" means the Original Charging Partnerships and any other
partnership which may from time to time accede to this Agreement and any
relevant Security Documents pursuant to a Supplemental Deed;
"CHARGING SUBSIDIARIES" means the Original Charging Subsidiaries and any other
company which may from time to time accede to this Agreement and any relevant
Security Documents pursuant to a Supplemental Deed;
"COMMITMENT" means in relation to a Bank the amount set opposite its name in
Part D of schedule 1 or, as the case may be, in any relevant Substitution
Certificate, as amended by any relevant term of this Agreement;
"COMPLIANCE CERTIFICATE" means either (i) a certificate substantially in the
form set out in schedule 6A in relation to the compliance (or otherwise) with
the undertakings in clause 12 issued by an Authorised Officer in relation to
Quarterly Management Accounts or (ii) a certificate substantially in the form
set out in Schedule 6B in relation to the compliance (or otherwise) with the
undertakings in clause 12 issued by the auditors of the TCN Group in relation to
annual financial statements;
"CONSOLIDATED ANNUALISED TCN GROUP NET OPERATING CASH FLOW" means, for the TCN
Group, twice the aggregate of the Consolidated TCN Group Net Operating Cash Flow
in respect of the relevant Six Month Period for the TCN Group;
"CONSOLIDATED ANNUALISED TELEWEST GROUP NET OPERATING CASH FLOW" means, for the
TeleWest Group, twice the aggregate of the Consolidated TeleWest Group Net
Operating Cash Flow in respect of the relevant Six Month Period for TeleWest
Group;
4
<PAGE>
"CONSOLIDATED TCN GROUP NET OPERATING CASH FLOW" means, in respect of each Six
Month Period, the Net Income of the TCN Group (plus any depreciation,
amortisation, other non-cash expenses and non-cash taxes, interest or other
charges in respect of Borrowed Money) but excluding:
(i) all sums constituting Management Fees accrued in
respect of such Six Month Period to any member of the
TCN Group by any Restricted Person;
(ii) any extraordinary income (except to the extent that
the same is used to meet a related extraordinary
expense), net of any Taxes paid or payable in respect
of such income, of the TCN Group during such Six
Month Period;
(iii) any interest income, net of any Taxes paid or payable
in respect of such income, of the TCN Group for such
Six Month Period;
(iv) any profits or losses attributable to the interest of
the TCN Group in any undertaking (as defined in
section 259 Companies Act 1985) which is not a
subsidiary undertaking (as defined in section 258
Companies Act 1985) of the Borrower;
all as determined in accordance with GAAP used in the preparation of and as
shown in the financial statements, Monthly Management Accounts or Quarterly
Management Accounts in respect of periods within such Six Month Period prepared
and delivered to the Agent pursuant to clause 10.1(f), clause 10.1(g) or clause
10.1(h) (as the case may be);
"CONSOLIDATED TELEWEST GROUP NET OPERATING CASH FLOW" means, in respect of each
Six Month Period, the Net Income of the TeleWest Group (plus any depreciation,
amortisation, other non-cash expenses and non-cash taxes, interest or other
charges in respect of Borrowed Money) but excluding:
(i) any extraordinary income (except to the extent that
the same is used to meet a related extraordinary
expense), net of any Taxes paid or payable in respect
of such income, of the TeleWest Group during such Six
Month period;
(ii) any interest income, net of any Taxes paid or payable
in respect of such income, of the TeleWest Group for
such Six Month Period;
(iii) to the extent included within Net Income any profits
or losses attributable to the interest of the
TeleWest Group in any undertaking (as defined in
section 259 Companies Act 1985) which is not a
subsidiary undertaking (as defined in section 258
Companies Act 1985) of the Borrower;
all as determined in accordance with GAAP used in the preparation of and as
shown in the financial statements, Monthly Management Accounts or Quarterly
Management Accounts in respect of periods
5
<PAGE>
within such Six Month Period prepared and delivered to the Agent pursuant to
clause 10.1(f), clause 10.1(g) or clause 10.1(h) (as the case may be);
"CONTRIBUTION" means in relation to a Bank the principal amount of the Loan
owing to such Bank at any relevant time;
"CONVERSION DATE" means the date, as specified in the relevant Conversion
Notice, on which any Revolving Advance made under Tranche A is to be converted
to a Revolving Advance under Tranche B, or vice versa, in each case in
accordance with the terms of this Agreement;
"CONVERSION NOTICE" means a notice substantially in the form of Schedule 2C;
"COTSWOLD LICENCES" means those licences of members of the TCN Group details of
which are set out in Part B of schedule 9;
"COX" means Cox Communications, Inc. a company incorporated in Delaware whose
principal place of business is 1400 Lake Hearn Drive, Atlanta, Georgia, 30319,
USA;
"DEBENTURE" means the composite guarantee and debenture and/or several guarantee
and debentures entered into or to be entered into by the Borrower and each other
TCN Entity in favour of the Security Trustee in the agreed form;
"DEED OF SUBORDINATION" means a deed of subordination to be entered into between
TeleWest and the Security Trustee pursuant to the terms of this Agreement,
substantially in the form of schedule 7 or on terms having substantially the
same commercial effect as the form of schedule 7;
"DEFAULT" means any Event of Default or any event or circumstance which with (i)
the giving of any notice referred to in this Agreement, (ii) the lapse of any
period of time referred to in this Agreement or (iii) the satisfaction of any
other condition referred to in this Agreement (or any combination of (i), (ii)
and (iii) above) would constitute an Event of Default;
"DISCLOSURE LETTER" means the letter of even date from the Borrower to the
Agent;
"DRAWDOWN DATE" means the date being a Banking Day on which an Advance is or is
to be drawn down;
"DRAWDOWN NOTICE" means a notice substantially in the form of schedule 2A;
"EARNINGS" means all monies whatsoever from time to time due or payable to any
member of the TCN Group arising out of the use or operation of the Cable Systems
including (but without limiting the generality of the foregoing) all revenues or
other payments due from Subscribers, damages for breach (or payments for
variation or termination) of any Subscriber's Agreement and any sums recoverable
from the insurers of the Cable Systems for loss of use or damage to such
systems;
6
<PAGE>
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating), pledge,
lien, hypothecation, assignment, assignation, trust arrangement or security
interest of any kind securing any obligation of any person or any other type of
preferential arrangement (including without limitation title transfer and/or
retention arrangements having similar effect);
"ENVIRONMENTAL CLAIM" means any claim, notice of violation, prosecution, demand,
action, official warning, abatement or other order (condition or otherwise),
relating to Environmental Matters and any notification or order requiring
compliance with the terms of any Environmental Licence or Environmental Law;
"ENVIRONMENTAL LAWS" includes all or any laws, statutes, regulations, treaties,
and judgments of any governmental authority or agency or any regulatory body in
any jurisdiction in which any member of the TCN Group is formed or carries on
business or the European Community relating to Environmental Matters applicable
to any member of the TCN Group and/or construction, installation and operation
of cable television and telecommunications systems in the TCN Franchises and/or
any other activities from time to time carried on by any member of the TCN Group
and/or the occupation or use of any property owned, leased or occupied by any
member of the TCN Group;
"ENVIRONMENTAL LICENCE" means any permit, licence, authorisation, consent or
other approval required at any time by any Environmental Law (but excluding, for
the avoidance of doubt, planning permission, listed building consent and
building regulation approvals) for the construction, installation and operation
of cable television and telecommunications systems in the TCN Franchises and/or
any other activities from time to time carried on by any member of the TCN
Group;
"ENVIRONMENTAL MATTERS" means: (i) any generation, deposit, disposal, keeping,
treatment, transportation, transmission, handling or manufacture of any waste
(as defined in the Environmental Protection Act 1990) or any Relevant Substance;
(ii) nuisance, noise, defective premises, health and safety at work or
elsewhere; and (iii) the pollution, conservation or protection of the
environment (both natural and built) or of man or any living organism supported
by the environment (both natural and built);
"EVENT OF DEFAULT" means any of the events or circumstances described in clause
13.1;
"EXCESS CASH FLOW" means the Consolidated TCN Group Net Operating Cash Flow for
the relevant Six Month Period, as shown in the relevant Compliance Certificate
less (i) any Total TCN Group Cash Paying Debt Interest Charges accrued during
such Six Month Period, (ii) cash repayments and/or prepayments of any Borrowed
Money of the TCN Group made during such Six Month Period and (iii) capital
expenditure of the TCN Group whether or not incurred to the extent that the same
is included in the Annual Budget for such Six Month Period as delivered to the
Agent under this Agreement;
7
<PAGE>
"FACILITY DEBT INTEREST CHARGES" means, in relation to any period, the total
amount of all interest, fees and commissions accruing in respect of the facility
granted pursuant to this Agreement during such period;
"FINANCE LEASE" means a lease treated as a finance lease pursuant to applicable
accounting standards (including at the date of this Agreement, Statement of
Standard Accounting Practice 21);
"GAAP" means generally accepted accounting principles and practices in the
United Kingdom;
"IMMATERIAL GROUP ENTITY" means any member of the TCN Group other than the
Borrower which (i) is dormant for the purposes of section 250(3) of the
Companies Act 1985 and (ii)(a) does not trade, (b) has no interest, legal or
beneficial, in the Licences, the Cable Systems, the Earnings, the Principal
Agreements, the share capital of any other member of the TCN Group which is not
an Immaterial Group Entity or any other assets used in the business of the TCN
Group and (c) is solvent (within the meaning of Section 123 of the Insolvency
Act 1986 or otherwise);
"INDEBTEDNESS" means any obligation for the payment or repayment of money,
whether as principal or as surety and whether present or future, actual or
contingent;
"INDEMNITY" means an indemnity issued or to be issued by any TCN Entity in
favour of a bank in relation to a bond issued by such bank in favour of any
regulatory body or other person pursuant to any Telecommunications and Cable
Laws;
"INFORMATION MEMORANDUM" means the information memorandum prepared in relation
to the Borrower and the facility granted pursuant to this Agreement and
distributed to certain banks during April 1996;
"INTELLECTUAL PROPERTY RIGHTS" means any patent, trade mark, service mark,
registered design, trade name or copyright required to carry on the business of
constructing, installing or operating cable television and telecommunication
systems in the TCN Franchises and such other business as may be permitted by the
terms of this Agreement and which is carried on at the relevant time;
"INTEREST PAYMENT DATE" means the last day of an Interest Period (and, in the
case of an Interest Period of more than six months, the dates falling at six
monthly intervals from the commencement of such Interest Period);
"INTEREST PERIOD" means, in relation to any Advance or the Loan, each period for
calculation of interest in respect of such Advance or the Loan ascertained in
accordance with clauses 5.5, 5.6 and 5.7;
"LIBOR" means, in relation to a particular period the arithmetic mean (expressed
as a percentage rounded upwards if necessary to the nearest four decimal places)
of the rates respectively quoted to the Agent by each of the Reference Banks at
the request of the Agent as such Reference Bank's
8
<PAGE>
offered rate for deposits of Sterling in an amount approximately equal to the
amount in relation to which LIBOR is to be determined for a period equivalent to
such period to prime banks in the London Interbank Market at or about 11.00 a.m.
on the first day of such period;
"LICENCES" means the Cotswold Licences, the South East Licences, the North East
Licences, the London South Licences, the Avon Licences, the Scotland Licences,
the SBCC Licences and, if applicable, any other licences issued to TCN Entities
under any Telecommunications and Cable Laws;
"LOAN" means the aggregate principal amount owing to the Banks under this
Agreement at any relevant time;
"LOCAL DELIVERY OPERATOR" means a person holding a licence to operate a cable
telephony and/or cable television system under a Telecommunications and Cable
Law in respect of a prescribed geographical area or any person in relation to
which such person is a wholly-owned (directly or indirectly) Subsidiary;
"LONDON SOUTH/AVON FACILITY" means the (pound)190,000,000 loan facility granted
pursuant to a loan agreement dated 4 October 1993 (as amended) between, among
others, London South Cable Partnership and Avon Cable Limited Partnership as
borrowers and The Toronto-Dominion Bank as agent;
"LONDON SOUTH LICENCES" means those licences of members of the TCN Group details
of which are set out in part C of schedule 9;
"MAJORITY BANKS" means Banks the aggregate of whose Contributions at any
relevant time exceeds 662/3 per cent. of the Loan or, if no Advance is then
outstanding, the aggregate of whose Commitments exceeds 662/3 per cent. of the
total of the Commitments of all of the Banks;
"MANAGEMENT FEES" means any management, consultancy or similar fees payable by
any TCN Entity to any Restricted Person or by any Restricted Person to any TCN
Entity, as applicable;
"MARGIN" shall be calculated in accordance with clause 5.2 or 5.3 (as
applicable) provided that, for the purposes of clause 5.8, "MARGIN" shall be
calculated in accordance with clause 5.3 (unless the relevant outstanding sum
was outstanding under Tranche A in which event the Margin shall be calculated in
accordance with clause 5.2);
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the ability of the
TCN Entities (taken as a whole) to perform all or any of their respective
obligations under or otherwise comply with the terms of this Agreement or any of
the Security Documents;
"MATERIAL FINANCIAL ADVERSE EFFECT" means a material adverse effect on the
ability of the TCN Entities (taken as a whole) to perform all or any of their
respective payment obligations under this Agreement or any of the Security
Documents;
9
<PAGE>
"MAXIMUM FORECASTED DEBT REQUIREMENT" means, in relation to any TCN Entities or
assets which have been acquired by the TCN Group under paragraph (vi) of the
definition of Permitted Investments, the maximum amount, estimated by the
Borrower in good faith and set out in the relevant investment analysis, that
such TCN Entities (taken as a whole) will be required to raise as Borrowed Money
(together with the amount of Borrowed Money that will be required to be raised,
in the case of an acquisition of assets) in order to comply with the
requirements of any Licences or Necessary Authorisations issued to such TCN
Entities (or comprising such assets) or such investment analysis (whichever is
the higher);
"MONTH" means a period beginning in one calendar month and ending in the next
calendar month on the day numerically corresponding to the day of the calendar
month on which it started,provided that (i) if the period started on the last
Banking Day in a calendar month or if there is no such numerically corresponding
day, it shall end on the last Banking Day in such next calendar month and (ii)
if such numerically corresponding day is not a Banking Day, the period shall end
on the next following Banking Day in the same calendar month but if there is no
such Banking Day it shall end on the preceding Banking Day and "months" and
"monthly" shall be construed accordingly;
"MONTHLY MANAGEMENT ACCOUNTS" means the monthly management accounts of the TCN
Group to be delivered (or which may be delivered) to the Agent pursuant to
clause 10.1(h) in the agreed form or containing information of the same type as
is required by such form;
"NECESSARY AUTHORISATIONS" means all approvals, authorisations and licences
(other than the Licences) from, all rights granted by and all filings,
registrations and agreements with any person including, without limitation, any
government or other regulatory authority necessary in order to enable each
member of the TCN Group to construct, maintain and operate the Cable Systems and
to carry on such other business as may be permitted by the terms of this
Agreement and which is carried on at the relevant time;
"NET INCOME" means, (i) in relation to the TCN Group for any period, the net
profit after Taxes of the TCN Group arising out of the use or operation of the
Cable Systems for such period (excluding, if included, the net profit after
Taxes of Cable Guide Limited), and (ii) in relation to the TeleWest Group for
any period, the net profit after Taxes of the TeleWest Group for such period, in
each case as determined in accordance with GAAP used in the preparation of and
as shown in the financial statements, Monthly Management Accounts or Quarterly
Management Accounts in respect of such period prepared and delivered to the
Agent pursuant to clause 10.1(f), 10.1(g) or 10.1(h);
"NETWORK SERVICE CENTRE" means the arrangements effected pursuant to the
agreement dated 16 May 1994 and expressed to take effect from 1 January 1993
between, inter alia, TeleWest Communications Group Limited, United Artists
Communications (North East) Partnership, United Artists Communications
(Cotswolds) Venture and United Artists Communications (South East) Partnership
together with any agreements to similar effect entered into from time to time
between, inter alia, members of the TCN Group and others;
10
<PAGE>
"NON-GUARANTEED COMPUTER LEASE" means any Finance Lease of computer equipment in
respect of which no guarantee has been issued pursuant to this Agreement;
"NON-GUARANTEED LEASE" means any Finance Lease in respect of which (i) no
guarantee has been issued pursuant to this Agreement and (ii) in the case of a
Non-Guaranteed Switch Lease, a Step-in Rights Agreement has been executed;
"NON-GUARANTEED SWITCH LEASE" means any Finance Lease of switch equipment and
software in respect of which (i) no guarantee has been issued pursuant to this
Agreement and (ii) a Step-in Rights Agreement has been executed;
"NON-GUARANTEED VEHICLE LEASE" means any Finance Lease of vehicles in respect of
which no guarantee has been issued pursuant to this Agreement;
"NORTH EAST LICENCES" means those licences of members of the TCN Group details
of which are set out in part D of schedule 9;
"NORTEL STEP-IN RIGHTS AGREEMENT" means the agreement of such name to be entered
into between Nortel Limited, United Artists Communications (North East)
Partnership, United Artists Communications (South East) Partnership, United
Artists Communications (Cotswolds) Venture, London South Cable Partnership,
United Artists Communications (Scotland) Venture, Avon Cable Joint Venture and
the Security Trustee, in the agreed form;
"ORIGINAL CHARGING PARTNERSHIPS" means those partnerships whose names and
principal places of business are set out in part B of schedule 1;
"ORIGINAL CHARGING SUBSIDIARIES" means those companies whose names and
registered numbers are set out in part A of schedule 1;
"ORIGINAL NON-CHARGING SUBSIDIARIES" means those companies whose names and
registered numbers are set out in part C of schedule 1;
"PERMITTED BORROWINGS" means:
(i) any Borrowed Money arising hereunder or under the
Security Documents;
(ii) any Borrowed Money approved by the Agent (acting on
the instruction of the Majority Banks);
(iii) any Borrowed Money included within Permitted
Intra-TCN Group Transactions or Permitted Guarantees;
11
<PAGE>
(iv) any Borrowed Money arising under the interest rate
protection arrangements referred to in clause
10.1(aa) or clause 11.1(i);
(v) any Borrowed Money arising under:
(a) Non-Guaranteed Switch Leases in aggregate
not exceeding (pound)120,000,000;
(b) Non-Guaranteed Vehicle Leases in aggregate
not exceeding (pound)50,000,000;
(c) Non-Guaranteed Computer Leases in aggregate
not exceeding (pound)20,000,000;
(d) any Borrowed Money arising under
Non-Guaranteed Leases (not falling within
(a), (b) or (c) above) in aggregate not
exceeding (pound)20,000,000;
Provided that the aggregate of all Borrowed Money
falling within this paragraph (v) shall not at any
time exceed (pound)140,000,000;
(vi) Subordinated Debt which is the subject of a Deed of
Subordination;
(vii) any Borrowed Money outstanding to any bank (which has
a credit rating from Standard & Poor's Corporation or
Moody's Investors Service Inc. of A (or its
equivalent) or better) with whom members of the TCN
Group have a cash management arrangement in place
provided that (a) the aggregate net amounts of
Borrowed Money outstanding to all such banks (after
taking account of deposits made by members of the TCN
Group with the relevant banks) does not
exceed(pound)5,000,000 or the excess
above(pound)5,000,000 would not otherwise be
prohibited under this Agreement, (b) the net balance
with each such bank is in credit at least once in any
30 day period and (c) the average (over any 365 day
period) of the aggregate of the net amount of
Borrowed Money outstanding to all such banks (after
taking account of deposits made by members of the TCN
Group with the relevant banks) does not exceed
(pound)2,500,000;
(viii) any Borrowed Money arising under Indemnities not
exceeding (pound)250,000 for each TCN Franchise;
(ix) after the end of the Revolving Period, any Borrowed
Money not within paragraphs (i) to (viii) above
provided that:
12
<PAGE>
(a) such Borrowed Money is incurred after the
end of the Revolving Period;
(b) no Default has occurred and is continuing at
the date of the incurrence of such Borrowed
Money; and
(c) on the two Quarter Days immediately
preceding the incurrence of such Borrowed
Money (as shown in the relevant Compliance
Certificates), immediately after the
incurrence of such Borrowed Money and at all
times thereafter Total TCN Group Debt is
less than 3 times Consolidated Annualised
TCN Group Net Operating Cash Flow; and
(x) any Borrowed Money not within paragraphs (i) to (ix)
above and not exceeding at any time in aggregate
(pound)15,000,000;
"PERMITTED DISPOSALS" means:
(i) the application of cash in (a) the acquisition of
assets or services in the ordinary course of
business, or the making of loans in the ordinary
course of business not, in any such case, prohibited
by the terms of this Agreement or any Security
Document, (b) the repayment of Permitted Borrowings
and the servicing thereof provided that the same is
not prohibited or otherwise restricted by the terms
of this Agreement or (c) the payment of moneys by the
Borrower to TeleWest to the extent permitted by the
terms of this Agreement;
(ii) any disposals approved by the Agent (acting on the
instructions of the Majority Banks);
(iii) the placing of deposits with banks (which have a
credit rating from Standard & Poor's Corporation or
Moody's Investor Service Inc. of A (or its
equivalent) or better) not in contravention of the
terms of this Agreement or any Security Document;
(iv) the sale of property or other assets (but excluding
any ownership interest in any of the TCN Entities) on
bona fide arms length commercial terms in the
ordinary course of business to the extent that the
net proceeds of sale are applied forthwith after such
sale in the acquisition of assets of a similar nature
and approximately equal value to be used in the
business of constructing, installing or operating
cable television and telecommunications systems in
the areas covered by the Licences or any directly
related business reasonably considered to be
financially beneficial to such business;
13
<PAGE>
(v) the disposal of property or other assets (but
excluding any ownership interest in any of the TCN
Entities) on bona fide arms length commercial terms
in the ordinary course of business in consideration
for the acquisition of assets of a similar nature and
approximately equal value to be used in the business
of constructing, installing or operating cable
television and telecommunications systems in the
areas covered by the Licences or any directly related
business reasonably considered to be financially
beneficial to such business;
(vi) the disposal, for full market value, of any interest
rate or currency swap or other hedging instrument no
longer required for the purpose for which it was
originally entered into;
(vii) disposals within Permitted Intra-TCN Group
Transactions;
(viii) the disposal of assets pursuant to any sale and
leaseback transactions which are permitted by and
fall within paragraph (v) of the definition of
Permitted Borrowings or as is permitted by the Banks
pursuant to Clause 20.1;
(ix) the disposal of any share (or other securities or any
interest therein) in (a) any Affiliate or (b) Cable
Guide Limited (registered no: 2025654); and
(x) disposals of assets on bona fide arm's length
commercial terms by a member of the TCN Group (other
than any disposals referred to in paragraphs (i) to
(ix) (inclusive) above) where such assets are
obsolete or no longer required for the purposes of
such member of the TCN Group's business;
"PERMITTED ENCUMBRANCES" means:
(i) any Encumbrance arising hereunder or under any of the
Security Documents;
(ii) any Encumbrance existing at the date hereof and set
out in parts I or II of Schedule 8 together with the
proposed Encumbrance set out in part III of Schedule
8;
(iii) any Encumbrance which the Agent, acting on the
instructions of the Majority Banks, has at any time
in writing agreed shall be a Permitted Encumbrance;
(iv) any Encumbrance arising in the ordinary course of
business by operation of law;
(v) any Encumbrance in favour of any bank incurred in
relation to any cash management or interest netting
arrangements;
14
<PAGE>
(vi) rights of set-off arising in the normal course of
business;
(vii) any retention of title of goods supplied to any
member of the TCN Group where such retention is
agreed in the ordinary course of its trading
activities and on customary terms provided that the
purchase price relating to such goods is required to
be paid within 120 days of the date on which the
relevant goods are supplied;
(viii) (for the avoidance of doubt) any Encumbrance arising
under Finance Leases where the title to the relevant
assets does not vest in any member of the TCN Group
to the extent amounts outstanding under such Finance
Leases fall under paragraph (v) of the definition of
Permitted Borrowings;
(ix) any Encumbrance (a "NEW ENCUMBRANCE") created by any
member of the TCN Group in substitution for any
Encumbrance referred to in paragraph (ii) above (an
"EXISTING ENCUMBRANCE") provided that (i) such
Existing Encumbrance is irrevocably and
unconditionally discharged no later than the time of
creation of the New Encumbrance, (ii) the New
Encumbrance relates only to the same assets as the
Existing Encumbrance, (iii) the Indebtedness secured
by the New Encumbrance does not exceed the
Indebtedness secured by the Existing Encumbrance and
(iv) if required by the Agent, before such New
Encumbrance is entered into, the beneficiary thereof
enters into a priorities arrangement with the Agent
and all of the Banks in form and substance
satisfactory to the Agent;
(x) any Encumbrance arising due to the provision of any
services or operations provided by any member of the
TCN Group whereby a member of the TCN Group agrees to
hold assets and equipment on trust for the benefit of
the users thereof provided that (a) the aggregate
book value of the assets and equipment held in such
an arrangement does not at any time exceed (a) in the
case of the Network Service Centre,(pound)25,000,000,
(b) in the case of Cable Internet, (pound)15,000,000
and (c) in the case of any such arrangement
(including the Network Service Centre and/or Cable
Internet),(pound)10,000,000 and (b) such users are
persons engaged in a similar business to that of the
TCN Group; and
(xi) any Encumbrance not within paragraphs (i) to (x)
above and securing Indebtedness in aggregate not
exceeding (pound)10,000,000 and where the assets the
subject of such Encumbrance have an aggregate book
value not exceeding (pound)15,000,000;
15
<PAGE>
"PERMITTED GUARANTEES" means:
(i) any guarantees or indemnities arising hereunder or
under the Security Documents;
(ii) any guarantees or indemnities approved by the Agent
(acting on the instructions of the Majority Banks);
(iii) any guarantees or indemnities included within
Permitted Intra-TCN Group Transactions;
(iv) any guarantees or indemnities included within
Permitted Borrowings; and
(v) any guarantees or indemnities not included in
paragraphs (i)-(iv) (inclusive) above provided that
the maximum liability thereunder (actual or
contingent) when aggregated with amounts outstanding
as Borrowed Money permitted by virtue of paragraph
(x) of the definition of Permitted Borrowings do not
exceed in aggregate (pound)15,000,000;
"PERMITTED INTRA-TCN GROUP TRANSACTIONS" means:
(i) loans made by a member of the TCN Group to a TCN
Entity;
(ii) any transaction approved as a Permitted Intra-TCN
Group Transaction by the Agent (acting on the
instructions of the Majority Banks);
(iii) the payment or declaration of any dividend, return on
capital, repayment of capital contributions or other
distributions by any member of the TCN Group to a
shareholder which is a TCN Entity;
(iv) the purchase, acquisition, sale or disposal of assets
or revenues (including, without limitation, the
acquisition of any business or interest therein) by a
TCN Entity from or, as the case may be, to another
TCN Entity provided such assets or revenues remain
charged to the Security Trustee pursuant to a
Security Document;
(v) the purchase, subscription for, or other acquisition
of any share (or other securities or any interest
therein) in any TCN Entity by any other TCN Entity
provided such shares are charged to the Security
Trustee pursuant to a Security Document;
(vi) the subscription for shares in any company on its
formation or the purchase of shares in any company
which has not at any time carried on any business
16
<PAGE>
(other than that associated with its formation or any
necessary administrative activities) provided that
(a) such shares are charged to the Security Trustee
pursuant to a Security Document and (b) promptly upon
such subscription or purchase being completed such
company becomes a TCN Entity pursuant to the
provisions of this Agreement; and
(vii) in relation to the ordinary course of trading, the
giving by any TCN Entity of any guarantee, bond or
indemnity in respect of the liabilities or
obligations of any other TCN Entity;
"PERMITTED INVESTMENTS" means:
(i) any transaction included within Permitted Disposals;
(ii) any transaction included within Permitted Intra-TCN
Group Transactions;
(iii) any investments approved by the Agent (acting on the
instructions of the Majority Banks);
(iv) any loans to or investments in Affiliates not
exceeding in aggregate (pound)18,000,000 at any time
after the date hereof but on or before 31 December
1997;
(v) any loans to TeleWest representing any amount
realised under paragraph (ix)(a) of "Permitted
Disposals" and any acquisition of or investment in,
or any acquisition of assets falling within paragraph
(ii) of clause 11.1(g) of any person which is not a
TCN Entity by a TCN Entity provided that (a) such
person is engaged in or such assets are required for
the business of (or a similar business to that of)
the TCN Group, (b) at the relevant time, no Default
has occurred and is continuing or would result from
the making of any such loan, acquisition or
investment and (c) the amount of any such loans
together with the aggregate consideration paid for
all investments or acquisitions falling within this
paragraph (v) does not exceed the aggregate net
consideration received in respect of disposals
falling within paragraph (ix)(a) of the definition of
Permitted Disposals;
(vi) on or after 1 January 1997, (a) any acquisition of
the entire ownership interest in, or (b) any
acquisition of assets falling within paragraph (ii)
of clause 11.1(g) of, any person which is not a TCN
Entity in each case by a TCN Entity provided that:
(1) in the case of sub-paragraph (a) above, such
person becomes a TCN Entity
contemporaneously with the making of such
acquisition or
17
<PAGE>
investment or, in the case of sub-paragraph
(b) above, such assets are charged (or
become subject to a charge) to the Security
Trustee pursuant to a Security Document
contemporaneously with the acquisition
thereof;
(2) the Borrower has delivered to the Agent an
investment analysis prepared by the Borrower
which shows that, immediately after making
such acquisition or investment:
(A) the Maximum Forecasted Debt
Requirement arising as a result of
all such acquisitions or investments
(together with the aggregate
consideration paid or payable (other
than by (i) the issue to the
relevant vendor of shares in
TeleWest or (ii) the payment to the
relevant vendor of all or part of
the proceeds of issue of any shares
in TeleWest (and, in either case,
the consequential issue of shares
and/or the creation of Subordinated
Debt by the Borrower to TeleWest))
in respect of all such acquisitions
or investments) will not exceed
(pound)120,000,000; and
(B) the Maximum Forecasted Debt
Requirement arising as a result of
all such acquisitions or investments
will not exceed (pound)40,000,000 in
each of financial years 1997 and
1998 and (pound)80,000,000 in any
subsequent financial year of the
Borrower; and
(3) in the case of sub-paragraph (a) above such
person is a Local Delivery Operator or in
the case of paragraph (b) above such assets
consist of all or substantially all of the
assets of a Local Delivery Operator
including all licences issued to such Local
Delivery Operator under the relevant
Telecommunications and Cable Laws;
(vii) any transaction not within paragraphs (i) to (vi)
(inclusive) above which would otherwise be prohibited
under clause 11.1(g) where the value of the aggregate
net consideration (in cash or otherwise) paid by
members of the TCN Group in any financial year of the
Borrower does not exceed (pound)1,000,000 (provided
that if any such amount is not used in any financial
year it may be carried forward and used in subsequent
financial years);
"PERMITTED PAYMENTS" means any payments or transfers of assets (including Value
Added Tax thereon, if applicable):
18
<PAGE>
(a) to any Restricted Person in relation to transactions carried out on
bona fide arm's length commercial terms in the ordinary course of
business;
(b) (1) by the Borrower to TeleWest (whether by way of (in the case of (i)
or (ii) below) dividend, other distribution, loan or interest payable
on Subordinated Debt or (2) (in the case of (iii) below) rental
payments by the relevant TCN Entity to TeleWest in respect of a
subFinance Lease entered into between such parties in relation to the
relevant TeleWest Lease) where such payment is to be used (and is so
used within a reasonable time) to fund:
(i) costs and expenses of TeleWest incurred in relation
to the TCN Group of up to:
(1) in respect of the period from the date
hereof to 31 December, 1996,
(pound)1,000,000; and
(2) in respect of each financial year
thereafter, (pound)2,000,000;
(ii) the payment by TeleWest of cash interest on the
Senior Securities then due or due within five Banking
Days; or
(iii) the payment of rental due on any TeleWest Lease,
provided that (1) no Default has occurred and is continuing
or would result from the making of any payment under this
paragraph (b) and (2) in the case of any rental payment,
TeleWest directs that such payment be made to (and such
payment is made to) the lessor under the corresponding
TeleWest Lease to be applied in or towards discharging
TeleWest's rental obligations under such TeleWest Lease, and
(c) consisting of dividends or other distributions or the payment of
interest on or the repayment of Subordinated Debt made to any
Restricted Person after the end of the Revolving Period provided that:
(i) on the two Quarter Days immediately preceding the
making of any such payment (adjusted as if such
payment had then been made) and immediately after
such payment the ratio of each of (A) Total TCN Group
Debt to Consolidated Annualised TCN Group Net
Operating Cash Flow and (B) Total TeleWest Group Debt
to Consolidated Annualised TeleWest Group Net
Operating Cash Flow in each case does not exceed 3.0
times; and
(ii) no Default has occurred and is continuing or would
result from the making of any payment under this
paragraph (c);
19
<PAGE>
"PLEDGE AND SECURITY AGREEMENTS" means each of the pledge and security
agreements to be entered into in favour of the Security Trustee by each of the
partners in each of the Charging Partnerships formed in the State of Colorado in
substantially the agreed form;
"PRINCIPAL AGREEMENTS" means the Sky Standard Cable Operator Agreements and the
BT InterConnect Agreements together with any agreements replacing any of the
same;
"PRO-FORMA TOTAL TCN GROUP DEBT SERVICE" means the aggregate of (i) the total
forecast amount of interest (calculated by reference to the rate of interest in
effect in relation to the relevant Borrowed Money of the TCN Group on the date
on which the calculation falls to be made, adjusted to take account of any
interest rate hedging arrangements) and any other charges (other than expenses
and any one-off fees paid otherwise than in lieu of interest or discount)
payable in respect of Borrowed Money of the TCN Group in respect of the twelve
months immediately following the date on which the relevant calculation under
this Agreement falls to be made and (ii) the principal amount of any Borrowed
Money of the TCN Group due to be repaid in accordance with the terms of such
Borrowed Money during such period;
"PRO-FORMA TOTAL TELEWEST GROUP DEBT SERVICE" means the aggregate of (i) the
total forecast amount of interest (calculated by reference to the rate of
interest in effect in relation to the relevant Borrowed Money of the TeleWest
Group on the date on which the calculation falls to be made, adjusted to take
account of any interest rate hedging arrangements) and any other charges (other
than expenses and any one-off fees paid otherwise than in lieu of interest or
discount) payable in respect of Borrowed Money of the TeleWest Group in respect
of the twelve months immediately following the date on which the relevant
calculation under this Agreement falls to be made and (ii) the principal amount
of any Borrowed Money of the TeleWest Group due to be repaid in accordance with
the terms of such Borrowed Money during such period;
"QUALIFYING BANK" means a person which falls within the definition of "bank" for
the purposes of section 349(3)(a) of the Income and Corporation Taxes Act 1988
but so that if such Act is amended or repealed, this definition shall be amended
in such manner as the Agent, after consultation with the Borrower, shall
determine to be necessary in order to define persons of the relevant equivalent
category to whom the Borrower may make payments hereunder without any obligation
to make deduction or withholding thereof;
"QUARTER DAYS" means 31st March, 30th June, 30th September and 31st December in
any year;
"QUARTERLY MANAGEMENT ACCOUNTS" means the quarterly management accounts of the
TeleWest Group or the TCN Group (as the case may be) to be delivered to the
Agent pursuant to clause 11.1(g) in the agreed form or containing information of
the same type as is required by such form;
"QUARTERLY PERIOD" means each period of approximately three months commencing on
the day after a Quarter Day and ending on the next following Quarter Day;
20
<PAGE>
"RBL STEP-IN RIGHTS AGREEMENT" means the agreement of such name to be entered
into between RB Leasing (March) Limited, TeleWest, United Artists Communications
(North East) Partnership, United Artists Communications (South East)
Partnership, United Artists Communications (Cotswolds) Venture, London South
Cable Partnership, Scotcable (Motherwell) Limited, Kingdom Cablevision Limited,
Tayside Cable Systems Limited, Avon Cable Joint Venture and the Security Trustee
in form and substance reasonably satisfactory to the Borrower and the Agent;
"REFERENCE BANKS" means the principal London offices of The Bank of New York,
Canadian Imperial Bank of Commerce, The Chase Manhattan Bank, N.A., National
Westminster Bank Plc and The Toronto-Dominion Bank and/or any other Bank
appointed as such pursuant to clause 18.12;
"REGION" means each of the geographical regions into which the business of the
TCN Group is divided at any relevant time for management accounting purposes,
being at the date of this Agreement, (i) London South, (ii) South West, (iii)
Scotland, (iv) South East, (v) North East, (vi) the North West and (vii) the
Midlands;
"REIMBURSEMENT AGREEMENT" means the agreement of such name to be entered into
between each of Original Charging Partnerships and the Borrower in the agreed
form;
"RELEVANT REVOLVING PERIOD" means the Tranche A Revolving Period or the Tranche
B Revolving Period, as applicable;
"RELEVANT SUBSTANCE" means (i) any radioactive emissions, (ii) electricity and
any electrical or electromagnetic emissions and (iii) any substance whatsoever
(whether in a solid or liquid form or in the form of a gas or vapour and whether
alone or in combination with any other substance) which is capable of causing
harm to man or any other living organism supported by the environment (both
natural and built), or damaging the environment (both natural and built) or
public health or welfare;
"RESTRICTED PAYMENT" means (a) any direct or indirect distribution, dividend,
loan or other payment (whether in cash, property, securities or otherwise) by
any member of the TCN Group (including, without limitation, any payment on
account of the share capital of the Borrower or capital stock or other
securities of the Borrower) or any interest thereon, (b) any transfer of any
assets by any member of the TCN Group and (c) any payment (whether in cash,
property, securities or otherwise) of principal of, or interest on, Subordinated
Debt, in each case to any Restricted Person;
"RESTRICTED PERSON" means any member of the TeleWest Group other than (i) the
TCN Entities and (ii) Cable Guide Limited (registered no: 2025654);
"REVOLVING ADVANCE" means an Advance made during the Revolving Period;
"REVOLVING FACILITY" means the revolving loan facility granted to the Borrower
pursuant to this Agreement;
21
<PAGE>
"REVOLVING PERIOD" means the period from (and including) the date hereof to (and
including) 31 December 2000;
"ROLLOVER NOTICE" means a notice substantially in the form of Schedule 2B;
"SBC" means SBC International Inc. of 2 Read's Way, Suite 222, Corporate
Commons, Newcastle, Delaware 19720, USA;
"SBCC" means SBC CableComms (UK) Limited (No. 2795350);
"SBCC LICENCES" means those licences of members of the TCN Group details of
which are set out in part G of schedule 9;
"SCOTLAND FACILITY" means the (pound)195,000,000 loan facility granted pursuant
to a loan agreement dated 13 June 1994 (as amended) between, among others,
TeleWest Scotland Holdings Limited as borrower and Canadian Imperial Bank of
Commerce as agent;
"SCOTLAND LICENCES" means those licences of members of the TCN Group details of
which are set out in part E of schedule 9;
"SCOTTISH SECURITY DOCUMENTS" means the Bond and Floating Charges, the Standard
Securities, and the Share Pledges;
"SECURITY DOCUMENTS" means the Debenture, the Deed of Subordination, the Pledge
and Security Agreements, the TeleWest Assignment, the Reimbursement Agreement,
the Scottish Security Documents, the RBL Step-in Rights Agreement, the Nortel
Step-in Rights Agreement, any other Stepin Rights Agreement, the Security Trust
Deed, any Supplemental Deed and all other mortgages, charges, guarantees,
indemnities and other instruments from time to time entered into in favour of
the Agent, the Security Trustee and/or the Banks by way of guarantee or other
assurance of and/or security for amounts owed to any of the Beneficiaries (as
defined or to be defined in the Debenture);
"SECURITY TRUST DEED" means the security trust deed to be entered into between
the Borrower, TeleWest, the Original Charging Subsidiaries, the Original
Charging Partnerships, the Arrangers, the Banks, the Bond Providers referred to
therein, the Interest Rate Beneficiaries referred to therein, the Agent and the
Security Trustee;
"SECURITY TRUSTEE" means CIBC Wood Gundy plc of Cottons Centre, Cottons Lane,
London SE1 2QL and/or such other person as may be appointed as security trustee
pursuant to any Security Document (as the context requires);
"SENIOR SECURITIES" means the $300,000,000 9-5/8% senior debentures due 2006 and
$1,536,413,000 11% senior discount debentures due 2007 issued by TeleWest on 3
October 1995;
22
<PAGE>
"SHARE PLEDGES" means the share pledges to be entered into by certain Original
Charging Subsidiaries over the shares in those members of the TCN Group
incorporated in Scotland (other than those which are Original Non-Charging
Subsidiaries) in the agreed form;
"SIX MONTH PERIOD" means each period of six months ending on the last day of a
calendar month;
"SKY STANDARD CABLE OPERATOR AGREEMENTS" means the agreements referred to in
part B of Schedule 10;
"SOUTH EAST LICENCES" means those licences of members of the TCN Group details
of which are set out in part F of schedule 9;
"STANDARD SECURITY" means the second ranking standard security to be entered
into by Scotcable (Motherwell) Limited in relation to Block 7, Goldie Road,
Bothwell Park Industrial Estate, Uddingston;
"STEP-IN RIGHTS AGREEMENT" means, in relation to any Non-Guaranteed Switch
Lease, a step-in rights agreement between the lessor, the lessee and the
Security Trustee, in substantially the form, mutatis mutandis (with such
amendments as the Security Trustee may approve) as the Nortel Step-in Rights
Agreement;
"STERLING" and "(POUND)" mean the lawful currency for the time being of the
United Kingdom and in respect of all payments to be made under this Agreement in
Sterling means immediately available, freely transferable cleared funds;
"SUBSCRIBER" means a person who has entered into an agreement (which has not
expired or been terminated) (a "SUBSCRIBER'S AGREEMENT") with a TCN Entity to be
provided with services by a TCN Entity through the operation of the Cable
Systems;
"SUBORDINATED DEBT" means, at any relevant time, all Indebtedness of the TCN
Entities owed to a Restricted Person;
"SUBSIDIARY" of a person means (a) any company or entity directly or indirectly
controlled by such person, for which purpose "control" means either ownership of
more than 50 per cent. of the voting share capital (or equivalent right of
ownership) of such company or entity or power to direct its policies and
management whether by contract or otherwise or the right to receive more than 50
per cent. of any distributions (of whatever nature) made in respect of the share
capital or other ownership interests of such company or entity and (b) in the
case of a company incorporated in England and Wales or Scotland, a Subsidiary
Undertaking;
"SUBSIDIARY UNDERTAKING" has the meaning given to such term in section 258
Companies Act 1985;
"SUBSTITUTE" has the meaning ascribed thereto in clause 17.4;
23
<PAGE>
"SUBSTITUTION CERTIFICATE" means a certificate substantially in the form of
schedule 5;
"SUPPLEMENTAL DEED" means a deed supplemental to this Agreement, the Debenture
and certain of the other Security Documents executed, inter alios, by a
Subsidiary or Associated Partnership of the Borrower in the form of schedule 4
to the Debenture or in such other form as is agreed between the Agent and the
Borrower whereby such Subsidiary or Associated Partnership becomes a party to
this Agreement and any relevant Security Document as a Charging Subsidiary or
Charging Partnership, as the case may be;
"TAXES" includes all present and future taxes, levies, imposts, duties, fees or
charges of a similar nature together with interest thereon and penalties in
respect thereof and "Taxation" shall be construed accordingly;
"TCI" means Tele-Communications, Inc. whose principal place of business is at
Terrace Tower II, 5619, DTC Parkway Englewood, Colorado, U.S.A.;
"TCN ENTITIES" means the Borrower, each Original Charging Subsidiary and each
Original Charging Partnership together with any company or partnership which is
or becomes a party to this Agreement and the relevant Security Documents
pursuant to clause 10.1(x);
"TCN FRANCHISES" means those areas in which the TCN Group is permitted to
operate cable television and cable telecommunications systems pursuant to the
Licences;
"TCN GROUP" means the Borrower, all its Subsidiaries and all its Associated
Partnerships from time to time;
"TELECOMMUNICATIONS AND CABLE LAWS" means the Telecommunications Act 1984, the
Cable and Broadcasting Act 1984, the Broadcasting Act 1990 and all other laws,
statutes, regulations and judgements relating to telecommunications or cable
television applicable to any member of the TCN Group, and/or the business
carried on by, any member of the TCN Group (for the avoidance of doubt, not
including laws, statutes, regulations or judgments relating solely to consumer
credit, data protection or intellectual property);
"TELEWEST" means TeleWest Communications plc (No. 2983307);
"TELEWEST ASSIGNMENT" means the assignment by way of security to be entered into
by TeleWest of TeleWest's rights in and to the Subordinated Debt in the agreed
form;
"TELEWEST COMMUNICATIONS" means TeleWest Communications Cable Limited (No.
2883742);
"TELEWEST GROUP" means TeleWest, all its Subsidiaries and all its Associated
Partnerships;
24
<PAGE>
"TELEWEST LEASE" means a Finance Lease of tangible and/or intangible assets by
TeleWest where such assets are the subject of a sub-Finance Lease between
TeleWest and a member of the TCN Group;
"TELEWEST/TCN LOAN AGREEMENT" means the loan agreement dated 21 May 1996
pursuant to which TeleWest has made a loan to the Borrower in an amount of
(pound)399,739,534.58;
"TERM" means, in relation to a Revolving Advance, the period for which such
Revolving Advance is or is to be made, as specified in the Drawdown Notice or
Rollover Notice for such Revolving Advance, or as otherwise determined in
accordance with the provisions hereof;
"TERM ADVANCE" means, after the end of the Revolving Period, the advance deemed
to be made pursuant to clause 4.15 and any advance resulting from the division
and/or consolidation of any Term Advance in accordance with clause 4.15;
"TERM DATE" means, in relation to a Revolving Advance, the last day of the Term
of such Revolving Advance;
"TERM PERIOD" means the period from (and including) 1 January 2001 to (and
including) 31 December 2005;
"TERM REPAYMENT DATE" means each of the dates referred to in clause 6.2;
"TOTAL COMMITMENTS" means at any relevant time the total of the Commitments of
all the Banks at such time;
"TOTAL TCN GROUP CASH PAYING DEBT" means that part of Total TCN Group Debt in
respect of which interest and any other charges (except expenses and any one-off
fees paid otherwise than in lieu of interest or discount) is currently paid or
payable;
"TOTAL TCN GROUP CASH PAYING DEBT INTEREST CHARGES" means, in relation to any
period, the total amount of all interest, fees and commissions accruing in
respect of Total TCN Group Cash Paying Debt during such period;
"TOTAL TCN GROUP DEBT" means the aggregate consolidated amount of all Borrowed
Money of the TCN Group less the amount of the loan made by TeleWest to the
Borrower dated 21 May 1996 pursuant to the TeleWest/TCN Loan Agreement;
"TOTAL TELEWEST GROUP CASH PAYING DEBT" means that part of TeleWest Group Debt
in respect of which interest and any other charges (except expenses and any
one-off fees paid otherwise than in lieu of interest or discount) is currently
paid or payable;
25
<PAGE>
"TOTAL TELEWEST GROUP CASH PAYING DEBT INTEREST CHARGES" means, in relation to
any period, the total amount of all interest, fees and commissions accruing in
respect of Total TeleWest Group Cash Paying Debt during such period;
"TOTAL TELEWEST GROUP DEBT" means the aggregate consolidated amount of all
Borrowed Money of the TeleWest Group;
"TRANCHE A" means that part of the Facility made available to the Borrower under
this Agreement which is referred to herein as such;
"TRANCHE A LOAN" means the aggregate principal amount of all Revolving Advances
made under Tranche A which are, at the relevant time, outstanding under Tranche
A;
"TRANCHE A REVOLVING PERIOD" means the period from (and including) the date
hereof to (and including) 31 December 1998;
"TRANCHE B" means that part of the Facility made available to the Borrower under
this Agreement which is referred to herein as such;
"TRANCHE B LOAN" means, at any time during the Revolving Period, the aggregate
principal amount of all Revolving Advances made under Tranche B which are, at
the relevant time, outstanding under Tranche B and, at any time after the
Tranche B Revolving Period, the aggregate principal amount of all Term Advances
outstanding under Tranche B;
"TRANCHE B REVOLVING PERIOD" means the period from (and including) 1 July 1996
to (and including) 31 December 2000;
"ULTIMATE SHAREHOLDERS" means US WEST, TCI, Cox and SBC and "Ultimate
Shareholder" means any one of them; and
"US WEST" means US WEST, Inc. whose principal place of business is at 7800 East
Orchard Road, Englewood, Colorado 80111, U.S.A.
1.3 HEADINGS
Clause headings and the table of contents are inserted for convenience of
reference only and shall be ignored in the interpretation of this Agreement.
1.4 CONSTRUCTION OF CERTAIN TERMS
In this Agreement, unless the context otherwise requires:
26
<PAGE>
(a) reference to clauses and schedules are to be construed as
references to the clauses of, and schedules to, this Agreement
and references to this Agreement include its schedules;
(b) reference to (or to any specified provision of) this Agreement
or any other document shall be construed as references to this
Agreement, that provision or that document as in force for the
time being and as from time to time amended in accordance with
the terms thereof, or, as the case may be, with the agreement
of the relevant parties and (where such consent is, by the
terms of this Agreement or the relevant document required to
be obtained as a condition to such amendment being permitted)
the prior written consent of the Agent, all of the Banks or
the Majority Banks (as the case may be);
(c) reference to a "regulation" include any present or future
regulation, rule, directive, requirement, request or guideline
(whether or not having the force of law) of any agency,
authority, central bank or government department or any
self-regulatory or other national or supra-national authority;
(d) words importing the plural shall include the singular and vice
versa;
(e) reference to a time of day are to London time;
(f) references to a person shall be construed as including
references to an individual, firm, company, corporation,
unincorporated body of persons or any State or any agency
thereof and that person's successors in title;
(g) reference to a document "in the agreed form" means in the form
of a draft of such document initialled by way of
identification by the Agent and the Borrower;
(h) references to a "guarantee" include references to an indemnity
or other assurance against financial loss including, without
limitation, an obligation to purchase assets or services as a
consequence of a default by any other person to pay any
Indebtedness and "guaranteed" shall be construed accordingly;
(i) reference to "set-off" includes retention, compensation and
the balancing of accounts under Scots law;
(j) references to any enactment shall be deemed to include
reference to such enactment as re-enacted, amended or
extended; and
(k) references to "business" in relation to any member of the TCN
Group mean the construction, installation, operation and
utilisation of cable television and/or telecommunications
systems in the TCN Franchises and/or any business directly
27
<PAGE>
related thereto and reasonably considered to be financially
beneficial to such business, and references to "ordinary
course of business" in relation to any member of the TCN Group
shall be similarly construed.
1.5 MAJORITY BANKS
Where this Agreement provides for any matter to be determined by reference to
the opinion of the Majority Banks or to be subject to the consent or request of
the Majority Banks or for any action to be taken on the instructions of the
Majority Banks, such opinion, consent, request or instructions shall (as between
the Banks) only be regarded as having been validly given or issued by the
Majority Banks if all of the Banks shall have received appropriate prior notice
of the matter on which such opinion, consent, request or instructions are
required to be obtained and the relevant majority of Banks shall have given or
issued such opinion, consent, request or instructions but the Borrower and each
other TCN Entity shall be entitled (and bound) to assume that such notice shall
have been duly received by each Bank and that the relevant majority shall have
been obtained to constitute Majority Banks whether or not this is in fact the
case.
1.6 AGENT'S OPINION
Where this Agreement provides for the Agent's opinion to determine whether any
matter would or is reasonably likely to have a Material Financial Adverse
Effect, a Material Adverse Effect and/or a material adverse effect, as the case
may be, the Agent shall act in accordance with the instructions of the Majority
Banks (acting reasonably) in making such determination.
1.7 BANK COMMITMENTS
For the purpose of the definition of "Majority Banks" in clause 1.2 and of
clause 18.10 references to the Commitment of a Bank shall, if the Total
Commitments have, at any relevant time, been reduced to zero, be deemed to be a
reference to the Commitment of that Bank immediately prior to such reduction to
zero.
2. THE FACILITY
2.1 AMOUNT
The Banks, relying upon each of the representations and warranties in clause 9
and in the Security Documents, agree to lend to the Borrower by way of Advances
upon and subject to the terms of this Agreement the principal sum of up to
(pound)1,200,000,000. The obligation of each Bank under this Agreement shall be
to contribute that proportion of each Advance which, as at the Drawdown Date of
such Advance, its Commitment bears to the Total Commitments.
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<PAGE>
2.2 OBLIGATIONS SEVERAL
The obligations of each Bank under this Agreement are several; the failure of
any Bank to perform such obligations shall not relieve any other Bank, the
Arrangers, the Agent, the Security Trustee or any TCN Entity of any of their
respective obligations or liabilities under this Agreement nor shall the Agent,
the Arrangers or the Security Trustee be responsible for the obligations of any
Bank (except for its own obligations, if any, as a Bank) nor shall any Bank be
responsible for the obligations of any other Bank under this Agreement.
2.3 INTERESTS SEVERAL
Notwithstanding any other term of this Agreement (but without prejudice to the
provisions of this Agreement relating to or requiring action by the Majority
Banks) the interests of the Agent, the Arrangers, the Security Trustee and the
Banks are several and the amount due to the Agent (for its own account), to each
Arranger, to the Security Trustee and to each Bank is a separate and independent
debt. The Agent, each Arranger, the Security Trustee and each Bank shall have
the right to protect and enforce its rights arising out of this Agreement and it
shall not be necessary for the Agent, any Arranger, the Security Trustee or any
Bank (as the case may be) to be joined as an additional party in any proceedings
for this purpose.
3. CONDITIONS
3.1 DOCUMENTS AND EVIDENCE
The obligations of each Bank to make its Commitment available shall be subject
to the condition that the Agent, or its duly authorised representative, shall
have received the documents and evidence specified in schedule 3 in form and
substance satisfactory to all of the Banks not later than three Banking Days
before the day on which the Drawdown Notice in respect of the first Advance is
given. The Agent shall notify the Banks of receipt of such Drawdown Notice and
whether or not the form and substance of such documents are satisfactory to the
Agent.
3.2 GENERAL CONDITIONS PRECEDENT
The obligation of each Bank to contribute to any Advance is subject to the
further conditions that at the time of the giving of a Drawdown Notice for, and
at the time of the making of, such Advance:
(a) the representations and warranties referred to in clause 9.3,
including those deemed to be made by the Borrower pursuant to
such clause, being (subject as provided in clause 9.3) true
and correct as of each such time as if each was made with
respect to the facts and circumstances existing at such time;
and
(b) no Default shall have occurred and be continuing which has not
been remedied or expressly waived or would result from the
making of such Advance.
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<PAGE>
3.3 WAIVER OF CONDITIONS PRECEDENT
The conditions specified in this clause 3 are inserted solely for the benefit of
the Banks and may be waived on their behalf in whole or in part and with or
without conditions by the Agent acting on the instructions of all of the Banks
in respect of the first Advance and on the instructions of the Majority Banks in
respect of subsequent Advances without prejudicing the right of the Agent acting
on such instructions to require fulfilment of such conditions in whole or in
part in respect of any other Advance.
4. REVOLVING ADVANCES
4.1 TRANCHE A AND TRANCHE B
Subject to the terms and conditions of this Agreement, Revolving Advances may be
made, at the option of the Borrower, under either Tranche A or Tranche B.
4.2 MAXIMUM TRANCHE A OUTSTANDINGS
The aggregate principal amount of Revolving Advances outstanding under Tranche A
on any day falling within the period set out in column (1) below shall not
exceed the amount set out against such period in column (2) below and no
Revolving Advance shall be made under Tranche A if, following the making of such
Revolving Advance, such limit would be exceeded:
<TABLE>
<CAPTION>
(1) (2)
PERIOD Maximum aggregate principal amount
of outstanding Revolving Advances
under Tranche A
<S> <C>
up to (and including) 30 June, 1998 (pound)300,000,000
from 1 July, 1998 to (and (pound)100,000,000
including) 31 December 1998
thereafter nil
</TABLE>
4.3 MAXIMUM TRANCHE B OUTSTANDINGS
The aggregate principal amount of Revolving Advances outstanding under Tranche B
on any day falling within the period set out in column (1) below shall not
exceed the amount calculated by multiplying Consolidated Annualised TCN Group
Net Operating Cash Flow (determined by reference to the most recently delivered
Monthly Management Accounts) at such time by the number set out against such
period in column (2) below and no Revolving Advances shall be made under Tranche
B if, following the making of such Revolving Advance, such limit would be
exceeded:
30
<PAGE>
<TABLE>
<CAPTION>
(1) (2)
PERIOD Multiple of Consolidated Annualised
TCN Group Net Operating Cash Flow
<S> <C>
from 1 July, 1996 to (and 6.5
including) 31 December, 1998
from (but excluding) 31 December, 6.0
1998 to (and including) 30 June,
1999
from (but excluding) 30 June, 1999 5.0
to (and including) 31 December,
1999
from (but excluding) 31 December, 4.0
1999 to (and including) 31
December, 2000
</TABLE>
4.4 MAXIMUM AGGREGATE OUTSTANDING ADVANCES
The aggregate principal amount of the Loan shall not at any time exceed
(pound)1,200,000,000 and no Revolving Advance shall be made under this Agreement
if, following the making of such Revolving Advance, such limit would be
exceeded.
4.5 DRAWDOWN
Subject to the terms and conditions of this Agreement a Revolving Advance will
be made to the Borrower following receipt by the Agent from the Borrower of a
Drawdown Notice signed by an Authorised Officer not later than 10 a.m. on the
second Banking Day before the proposed Drawdown Date. A Drawdown Notice shall be
effective on actual receipt by the Agent and, once given, shall, subject as
provided in clause 5.10(a), be irrevocable. No Drawdown Notice may be given in
respect of an amount which is the subject of a notice received by the Agent
under clause 6.9.
4.6 ROLLOVER
Subject to the terms and conditions of this Agreement, if the Borrower wishes to
draw a Revolving Advance under Tranche A or Tranche B on any day (the "RELEVANT
DAY") of an amount of not more than the amount of a Revolving Advance which is
due to be repaid on the Relevant Day in accordance with clause 4.13, the
Borrower shall not be obliged to serve a Drawdown Notice in relation to such new
Revolving Advance but may serve a Rollover Notice signed by an Authorised
Officer specifying the amount of the new Revolving Advance and the Term thereof
and whether such new Revolving Advance is to be made under Tranche A or Tranche
B. A Rollover Notice shall be effective on actual receipt by the Agent (which
must be no later than 10 a.m. on the second Banking Day before the Relevant Day)
and, once given, shall, subject as provided in clause 5.10(a), be irrevocable.
No
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<PAGE>
Rollover Notice may be given in respect of an amount which is the subject of a
notice received by the Agent under clause 6.9.
4.7 NO ROLLOVER NOTICE
If the Agent does not receive a Rollover Notice from the Borrower in accordance
with clause 4.6 in respect of a new Revolving Advance under either Tranche A or
Tranche B to be made on the Term Date of a Revolving Advance outstanding to the
Borrower then, subject to the terms and conditions of this Agreement (including
without limitation clauses 4.2, 4.3 and 4.4), a Revolving Advance of an amount
equal to the amount of the Revolving Advance due to be repaid shall be made to
the Borrower under Tranche A, if the Revolving Advance due to be repaid was
outstanding under Tranche A, or under Tranche B, if the Revolving Advance due to
be repaid was outstanding under Tranche B on such Term Date for a Term of one
month or such other period as shall comply with clause 4.10 unless the amount of
such Revolving Advance is the subject of a notice received by the Agent under
clause 6.9.
4.8 CONVERSION TO TRANCHE A
The Borrower may at any time during the Tranche A Revolving Period convert all
or any of the outstanding Revolving Advances made to the Borrower under Tranche
B so that such Revolving Advances are outstanding under Tranche A, in each case
with effect from the relevant Conversion Date, following receipt by the Agent of
a Conversion Notice signed by an Authorised Officer not later than 10 a.m. on
the second Banking Day before the proposed Conversion Date. A Conversion Notice
under this clause 4.8 shall be effective on actual receipt by the Agent and once
given shall be irrevocable. Each Conversion Notice given under this clause 4.8
shall contain a confirmation that, on the relevant Conversion Date, the Borrower
will be in compliance with the provisions of clause 4.2, having taken into
account such conversion. No Tranche B Advance may be converted to a Tranche A
Advance if either (i) such Tranche B Advance became a Tranche B Advance as a
result of conversion from a Tranche A Advance during the then current Interest
Period or (ii) the most recent conversion of a Tranche B Advance to a Tranche A
Advance took place within one month prior to the date of the proposed conversion
(but this proviso (ii) shall not restrict the conversion of more than one
Tranche B Advance to a Tranche A Advance on any one day).
4.9 CONVERSION TO TRANCHE B
The Borrower may at any time during the Tranche A Revolving Period convert all
or any of the outstanding Revolving Advances made to the Borrower under Tranche
A so that such Revolving Advances are outstanding under Tranche B with effect
from the relevant Conversion Date, following receipt by the Agent of a
Conversion Notice signed by an Authorised Officer not later than 10 a.m. on the
second Banking Day before the proposed Conversion Date. A Conversion Notice
under this clause 4.9 shall be effective on actual receipt by the Agent and once
given shall be irrevocable. Each Conversion Notice under this clause 4.9 shall
contain a confirmation that, on the relevant Conversion Date, the Borrower will
be in compliance with the provisions of clause 4.3, having taken into account
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<PAGE>
such conversion. No Tranche A Advance may be converted to a Tranche B Advance if
either (i) such Tranche A Advance became a Tranche A Advance as a result of
conversion from a Tranche B Advance during the then current Interest Period or
(ii) the most recent conversion of a Tranche A Advance to a Tranche B Advance
took place within one month prior to the date of the proposed conversion (but
this proviso (ii) shall not restrict the conversion of more than one Tranche A
Advance to a Tranche B Advance on any one day).
4.10 TERM AND AMOUNT OF REVOLVING ADVANCES
(a) Revolving Advances may be made only on Banking Days falling
within, in the case of Revolving Advances made under Tranche
A, the Tranche A Revolving Period or, in the case of Revolving
Advances made under Tranche B, the Tranche B Revolving Period,
and may be borrowed only for a Term of one month or two, three
or six months or (with the prior agreement of all of the
Banks) any other period in any such case ending not later than
the last day of the Relevant Revolving Period Provided that
any Revolving Advances made less than one month prior to the
last day of the Relevant Revolving Period may only be borrowed
for the period up to and ending on such date;
(b) each Revolving Advance shall be of either (i)
(pound)10,000,000 or any larger sum which is an integral
multiple of (pound)5,000,000 or (ii) the remaining available
facility under Tranche A or Tranche B (as applicable);
(c) no Revolving Advance may be drawn down under Tranche A and no
Revolving Advance drawn down under Tranche B may be converted
to Tranche A on any day if the making of such Revolving
Advance or such conversion would cause the limits contained in
either clause 4.2 or clause 4.4 to be exceeded;
(d) no Revolving Advance may be drawn down under Tranche B and no
Revolving Advance drawn down under Tranche A may be converted
to Tranche B on any day if the making of such Revolving
Advance or such conversion would cause the limits contained in
either clause 4.3 or clause 4.4 to be exceeded; and
(e) no Revolving Advance may be drawn down if, as a result, there
would be more than eight Revolving Advances then outstanding.
4.11 NOTIFICATION TO BANKS
On the date of receipt of a Drawdown Notice or a Rollover Notice complying with
the terms of this Agreement or if a Revolving Advance is otherwise to be made in
accordance with clause 4.7 the Agent shall notify each Bank thereof, of the date
on which such Revolving Advance is to be made, the Term thereof, whether such
Revolving Advance is to be made under Tranche A or Tranche B. Subject to the
provisions of clauses 3 and 4.13, on the date for the making of the relevant
Revolving
33
<PAGE>
Advance each of the Banks shall make available to the Agent its portion of such
Revolving Advance in accordance with clause 8.2. On the date of receipt of a
Conversion Notice complying with the terms of this Agreement the Agent shall
notify each Bank thereof and of the Conversion Date and whether under Tranche A
or Tranche B and the amount which is the subject of such Conversion Notice.
4.12 TERMINATION OF COMMITMENTS
Any part of the Commitments undrawn and uncancelled in respect of Tranche B at
the end of the Tranche B Revolving Period or, in respect of Tranche A at the end
of the Tranche A Revolving Period, shall thereupon be automatically reduced to
zero.
4.13 REPAYMENT OF REVOLVING ADVANCES
The Borrower agrees to repay each Revolving Advance in respect of which the Term
Date is before the last day of the Relevant Revolving Period on such Term Date.
If a Revolving Advance (the "NEW REVOLVING ADVANCE") is to be made to the
Borrower on a day on which another Revolving Advance made to the Borrower (the
"MATURING REVOLVING ADVANCE") is due to be repaid then, subject to the terms of
this Agreement and so long as the conditions referred to in clause 3.2 shall
have been satisfied in relation to the new Revolving Advance, (i) the maturing
Revolving Advance shall be deemed to have been repaid on its Term Date either in
whole (if the new Revolving Advance is equal to or greater than the maturing
Revolving Advance) or in part (if the new Revolving Advance is less than the
maturing Revolving Advance) and the Borrower shall only be obliged to repay the
principal amount by which the maturing Revolving Advance exceeds the new
Revolving Advance and (ii) to the extent that the maturing Revolving Advance is
so deemed to have been repaid, the principal amount of the new Revolving Advance
to be made on such date shall be deemed to have been credited to the account of
the Borrower by the Agent on behalf of the Banks in accordance with the terms of
this Agreement and the Banks shall only be obliged to make available to the
Borrower pursuant to clause 4.11 a principal amount (if any) equal to the amount
by which the new Revolving Advance exceeds the maturing Revolving Advance.
4.14 CONVERSION TO A TERM LOAN
On the last day of the Tranche B Revolving Period the revolving credit facility
made available under Tranche B shall convert to a term loan and all outstanding
Revolving Advances the Term Date of which is the last day of the Revolving
Period shall be consolidated with any other such Revolving Advances into the
Loan and be repaid in accordance with clause 6.
4.15 TERM ADVANCES
Following the consolidation referred to in clause 4.14, all Revolving Advances
shall be deemed to have been repaid and the Loan shall be deemed to be a Term
Advance for the purposes of this Agreement. The Borrower may by notice received
by the Agent not later than 10 a.m. on the second
34
<PAGE>
Banking Day before the beginning of each Interest Period in respect of a Term
Advance specify that such Term Advance shall be divided into more than one Term
Advance, or consolidated with any other Term Advance outstanding in respect of
the Loan in respect of which the then current Interest Period ends on the same
day as the current Interest Period in respect of such Term Advance. No more than
12 Term Advances may be outstanding under this Agreement at any time. If more
than one Term Advance is outstanding in respect of the Loan each such Term
Advance shall be either (pound)10,000,000 or any larger sum which is an integral
multiple of (pound)5,000,000 or the balance of the Loan.
5. INTEREST AND INTEREST PERIODS; ALTERNATIVE INTEREST RATES
5.1 NORMAL INTEREST RATES
The Borrower agrees to pay interest on each Advance in respect of each Interest
Period relating thereto on each Interest Payment Date at the rate per annum
determined by the Agent to be the aggregate of (a) the applicable Margin, (b)
the Additional Cost and (c) LIBOR.
5.2 TRANCHE A MARGIN
The Margin in relation to any Revolving Advance made under Tranche A shall be
2.25 per cent. per annum.
5.3 TRANCHE B MARGIN
The Margin in relation to any Revolving Advance made under Tranche B and any
Term Advance shall (subject to the proviso below) be the rate set out in column
(1) below against the ratio of Total TCN Group Cash Paying Debt to Consolidated
Annualised TCN Group Net Operating Cash Flow set out in column (2) below as
shown in the most recently delivered Monthly Management Accounts (or, after the
end of the Revolving Period, the most recently delivered Quarterly Management
Accounts or Monthly Management Accounts) of the TCN Group delivered to the Agent
under this Agreement prior to the first day of the relevant Interest Period:
(1) (2)
RATE (PER CENT. Ratio of Total TCN Group Cash Paying
PER ANNUM) Debt to Consolidated Annualised TCN
Group Net Operating Cash Flow
1.875 greater than or equal to 6.0
1.500 less than 6.0 but greater than or equal to
4.5
1.000 less than 4.5 but greater than or equal to
3.0
0.500 less than 3.0
35
<PAGE>
provided that if on the first day of the relevant Interest Period the Borrower
has failed to deliver any relevant financial statements then due under this
Agreement within the time period for the Borrower so to deliver such financial
statements, then the Margin for such Advance during such Interest Period shall
from (and including) the last day upon which such financial statements were due
to (but excluding) the date of delivery of such financial statements be 1.875
per cent. per annum.
5.4 CONVERSION MARGIN
In respect of any Interest Period during which a Revolving Advance is converted
from Tranche A to Tranche B (or vice versa) the Margin for that part of the
Interest Period that the Revolving Advance was outstanding under Tranche A shall
be determined in accordance with clause 5.2 and the Margin for that part of the
Interest Period that the Revolving Advance was outstanding under Tranche B was
outstanding shall be determined in accordance with clause 5.3.
5.5 INTEREST PERIODS
The Interest Period in relation to each Revolving Advance shall be of a duration
equal to the Term of such Revolving Advance. Interest Periods in respect of Term
Advances shall be of a duration determined in accordance with clauses 5.6 and
5.7.
5.6 SELECTION OF INTEREST PERIODS FOR TERM ADVANCES
The Borrower may by notice received by the Agent not later than 11 a.m. on the
second Banking Day before the beginning of each Interest Period in respect of a
Term Advance specify whether such Interest Period shall have a duration of one
month or two, three or six months or (with the prior agreement of all of the
Banks) any other period.
5.7 DETERMINATION OF INTEREST PERIODS FOR TERM ADVANCES
Every Interest Period in respect of a Term Advance shall be of the duration
specified by the Borrower pursuant to clause 5.6 but so that:
(a) the initial Interest Period in respect of each Term Advance
will commence on the last day of the Tranche B Revolving
Period and each subsequent Interest Period in respect of such
Term Advance will commence forthwith upon the expiry of the
previous Interest Period in respect of such Term Advance;
(b) Interest Periods in respect of Term Advances of an aggregate
amount at least equal to the amount of the Loan to be repaid
on any Term Repayment Date shall end on such date; and
(c) if the Borrower fails to specify the duration of an Interest
Period in accordance with the provisions of clause 5.6 and
this clause 5.7 such Interest Period shall, subject to this
clause 5.7, have a duration of one month.
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<PAGE>
5.8 DEFAULT INTEREST
If the Borrower fails to pay any sum (including, without limitation, any sum
payable pursuant to this clause 5.8) on its due date for payment under this
Agreement the Borrower agrees to pay interest on such sum from the due date up
to the date of actual payment (as well after as before judgment) at a rate
determined by the Agent pursuant to this clause 5.8. The period beginning on
such due date and ending on such date of payment shall be divided into
successive periods of not more than three months as selected by the Agent (after
consultation with the Banks) each of which (other than the first, which shall
commence on such due date) shall commence on the last day of the preceding such
period. The rate of interest applicable to each such period shall be the
aggregate (as determined by the Agent) of (a) one per cent. per annum, (b) the
Margin, (c) the Additional Cost and (d) LIBOR, provided that if such unpaid sum
is all or part of an Advance which shall have become due and payable prior to
the last day of the then current Interest Period relating thereto, the first
such period selected by the Agent shall end on the last day of such Interest
Period and interest shall be payable on such unpaid sum during such period at a
rate one per cent. above the rate applicable thereto immediately before it
became due. Default interest under this clause 5.8 shall be due and payable on
the last day of each period determined by the Agent pursuant to this clause 5.8
or, if earlier, on the date on which the sum in respect of which such default
interest is accruing shall actually be paid. If, for the reasons specified in
clause 5.10(a)(i) or (ii), the Agent is unable to determine a rate in accordance
with the foregoing provisions of this clause 5.8 each Bank shall promptly notify
the Agent of the cost of funds to such Bank and interest on any sum not paid on
its due date for payment shall be calculated for each Bank at a rate determined
by the Agent to be one per cent. per annum above the aggregate of the Margin and
the cost of funds (including Additional Cost) to such Bank.
5.9 NOTIFICATION OF INTEREST PERIODS AND INTEREST RATE
The Agent shall notify the Borrower and the Banks promptly of the amount of each
Term Advance, the duration of each Interest Period or other period for the
calculation of interest (or, as the case may be, default interest) and of each
rate of interest determined by it under this clause 5.
5.10 MARKET DISRUPTION; NON-AVAILABILITY
(a) If and whenever, at any time prior to the commencement of any
Interest Period:
(i) the Agent shall have determined (which
determination shall, in the absence of
manifest error, be conclusive), that
adequate and fair means do not exist for
ascertaining LIBOR during such Interest
Period; or
(ii) none or only one of the Reference Banks
supplies the Agent with a quotation for
calculating LIBOR; or
37
<PAGE>
(iii) the Agent shall have received notification
from Banks with Contributions aggregating
not less than one-third of the Loan that
deposits in Sterling are not available to
such Banks in the London Interbank Market in
the ordinary course of business in
sufficient amounts to fund their
contributions to the relevant Advance for
such Interest Period or that LIBOR does not
accurately reflect the cost to such Banks of
obtaining such deposits;
the Agent shall forthwith give notice (a "DETERMINATION
NOTICE") thereof to the Borrower and to each of the Banks. A
Determination Notice shall contain particulars of the relevant
circumstances giving rise to its issue. After the giving of
any Determination Notice the undrawn amount of the Commitments
of all of the Banks shall not be borrowed until notice to the
contrary is given to the Borrower by the Agent.
(b) During the period of 10 days after any Determination Notice
has been given by the Agent under clause 5.10(a), (i) if the
Borrower so requires, the Borrower and the Agent and each
affected Bank shall enter into negotiations with a view to
agreeing a substitute basis for determining the rates of
interest from time to time applicable to the Advances
thereafter and any such substitute basis that is agreed shall
take effect in accordance with its terms; and (ii) if no
substitute basis has been agreed between the Borrower, the
Agent and each affected Bank pursuant to paragraph (i) above,
each affected Bank shall certify a substitute basis for
funding its contribution to the relevant Advance. Such
substitute basis may (without limitation) include alternative
interest periods, alternative currencies or alternative rates
of interest but shall include a margin above the cost of funds
including Additional Cost, if any, to such Bank equivalent to
the Margin for the relevant Interest Period determined in
accordance with clauses 5.2 and 5.3 (as applicable).
Each substitute basis so agreed in accordance with (i) or,
failing such agreement, certified in accordance with (ii)
shall be binding upon the Borrower, the Agent and (in the case
of (i)) each Bank and (in the case of (ii)) each affected Bank
and shall take effect in accordance with its terms from the
date specified in the Determination Notice.
5.11 REFERENCE BANK QUOTATIONS
If any Reference Bank is unable or otherwise fails to furnish a quotation for
the purpose of calculating LIBOR the interest rate shall be determined, subject
to clause 5.10, on the basis of the quotations furnished by the remaining
Reference Banks.
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<PAGE>
6. REPAYMENT, PREPAYMENT AND CANCELLATION
6.1 REPAYMENT OF THE TRANCHE A LOAN
The Borrower agrees to repay the outstanding amount of the Tranche A Loan on or
before 31 December 1998.
6.2 REPAYMENT OF THE TRANCHE B LOAN
The Borrower agrees to repay the Tranche B Loan in instalments on each date
specified in column (1) below and in the proportion of the Tranche B Loan
outstanding at the end of the Tranche B Revolving Period specified opposite the
relevant date in column (2) below.
(1) (2)
DATE PROPORTION
31 December 2001 5.00%
31 March 2002 5.00%
30 June 2002 5.00%
30 September 2002 5.00%
31 December 2002 5.00%
31 March 2003 6.25%
30 June 2003 6.25%
30 September 2003 6.25%
31 December 2003 6.25%
31 March 2004 6.25%
30 June 2004 6.25%
30 September 2004 6.25%
31 December 2004 6.25%
31 March 2005 6.25%
30 June 2005 6.25%
30 September 2005 6.25%
31 December 2005 6.25%
6.3 VOLUNTARY PREPAYMENT
The Borrower may prepay any Advance in whole or in part (being (pound)10,000,000
or any larger sum which is an integral multiple of (pound)5,000,000) at any
time.
6.4 ADDITIONAL VOLUNTARY PREPAYMENT
The Borrower may also prepay (in whole but not in part only), without premium or
penalty, but without prejudice to its obligations under clauses 5.10, 8.7 and
15.2:
39
<PAGE>
(a) the Contribution of any Bank to which the Borrower shall have
become obliged to pay additional amounts under clause 8.7 or
15.2;
(b) any Bank's Contribution to which a substitute basis applies by
virtue of clause 5.10(b); or
(c) the Contribution of any Bank if it is or becomes contrary to
any law or regulation for that Bank to contribute to Advances
or to maintain its Commitment or fund or maintain its
Contribution.
Upon any notice of such prepayment being given, the Commitment of the relevant
Bank shall be reduced to zero.
6.5 MANDATORY PREPAYMENT
(a) The Borrower shall apply, or procure the application of, 50 per cent.
of Excess Cash Flow (if any) in respect of each of the Six Month
Periods of the Borrower ending on 30 June and 31 December in each year
(commencing with the Six Month Period ending 30 June 2001) in
prepayment of the Loan provided that the first (pound)10,000,000 which
the Borrower would, but for this proviso, have been obliged so to apply
or procure the application of may be retained by the Borrower (but
without prejudice to the operation of this clause 6.5(a) in respect of
all other relevant amounts).
(b) Each prepayment to be made under paragraph (a) above shall:
(i) be made on Interest Payment Dates falling after the
date upon which the Quarterly Management Accounts in
respect of the Quarterly Period ending on the last
day of the relevant Six Month Period are delivered to
the Agent pursuant to clause 10.1(g), beginning with
the first such date and continuing until the
prepayment obligation under paragraph (a) above in
respect of such Six Month Period has been satisfied;
and
(ii) if on any Interest Payment Date upon which an amount
of Excess Cash Flow is to be applied in prepayment of
the Loan:
(1) such amount is less than the amount of the
Advances whose Interest Period ends on such
date, the Borrower may select against which
Advance or Advances the prepayment is to be
made and the proportion of the relevant
amount to be prepaid on each Advance but
shall ensure that the full amount of such
Excess Cash Flow required to be applied is
so applied in prepayment;
40
<PAGE>
(2) such amount is equal to or greater than the
amount of the Advances whose Interest Period
ends on such date, the Borrower shall prepay
each such Advance on such date.
(c) The Borrower's obligations under paragraphs (a) and (b) above shall
cease in respect of the relevant Six Month Period and all future Six
Month Periods if, in respect of each of two consecutive Six Month
Periods, Total TCN Group Debt on the last day of the relevant Six Month
Period is less than 3.5 times Consolidated Annualised TCN Group Net
Operating Cashflow calculated by reference to such Six Month Period,
each as demonstrated in the Compliance Certificate for the Quarterly
Period ending on the last day of the relevant Six Month Period.
(d) If the Compliance Certificate for one Quarterly Period demonstrates
that Total TCN Group Debt on the relevant Quarter Day is less than 3.5
times Consolidated Annualised TCN Group Net Operating Cashflow
calculated by reference to the Six Month Period ending on such Quarter
Day, then the Borrower's obligations under paragraphs (a) and (b) above
shall be suspended until the delivery of the Quarterly Management
Accounts for the subsequent Quarterly Period (the "SUBSEQUENT
ACCOUNTS") are delivered. If the Compliance Certificate in respect of
that subsequent Quarterly Period also demonstrates that Total TCN Group
Debt on the relevant Quarter Day is less than 3.5 times Consolidated
Annualised TCN Group Net Operating Cashflow calculated by reference to
the Six Month Period ending on such subsequent Quarter Day then such
suspended obligations shall be extinguished; if not, then such
suspended obligations shall take effect as of the date of delivery of
the Subsequent Accounts but otherwise in accordance with paragraphs (a)
and (b) above.
6.6 APPLICATION OF PREPAYMENTS TO REPAYMENT INSTALMENTS
Any amounts prepaid pursuant to this Agreement in respect of the Tranche B Loan
after the end of the Tranche B Revolving Period shall be applied against the
repayment instalments calculated pursuant to clause 6.2 pro rata to such
instalments.
6.7 AMOUNTS PAYABLE ON PREPAYMENT
Any prepayment under this Agreement shall be made together with: (a) accrued
interest to the date of prepayment (calculated, in the case of any prepayment of
a Bank's Contribution pursuant to clause 6.4(b), and in respect of the period
during which the relevant substitute basis has applied by virtue of clause
5.10(b), at a rate per annum equal to the rate certified by such Bank in
accordance with clause 5.10(b)); (b) any additional amount payable under clause
8.7 or 15.2; and (c) all other sums payable by the Borrower to the relevant Bank
or the Banks (as the case may be) under this Agreement including, without
limitation, any accrued commitment commission payable under clause 7.1(c) and
any amounts payable under clause 14.
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<PAGE>
6.8 NOTICE OF PREPAYMENT
No prepayment may be effected unless the Borrower shall have given the Agent at
least two Banking Days' notice of its intention to make such prepayment. Every
notice of prepayment shall be effective only on actual receipt by the Agent,
shall be irrevocable and shall oblige the Borrower to make such prepayment on
the date specified. No amount prepaid after the end of the Tranche B Revolving
Period may be reborrowed. The Borrower may not prepay the Loan or any part
thereof save as expressly provided in this Agreement.
6.9 CANCELLATION OF COMMITMENTS
The Borrower may at any time by notice to the Agent (effective only on actual
receipt) cancel with effect from a date not less than two Banking Days after the
receipt by the Agent of such notice the whole or any part (being
(pound)10,000,000 or any larger sum which is an integral multiple of
(pound)5,000,000) of the total of the Commitments of all of the Banks which is
not then outstanding or requested in a Drawdown Notice in respect of which an
Advance has not then been made. Any such notice of cancellation, once given,
shall be irrevocable and upon such cancellation taking effect the Commitment of
each of the Banks shall be reduced proportionately.
7. FEES AND EXPENSES
7.1 FEES
The Borrower agrees to pay to the Agent whether or not any part of the
Commitments is ever advanced:
(a) Front end fee
on the earlier of (i) the date of the first Revolving Advance
and (ii) the date falling 7 days after the date of this
Agreement, for the account of the Arrangers, an up-front fee
of an amount agreed between the Borrower and the Arrangers and
set out in a letter of even date herewith;
(b) Agency fee
on the earlier of (i) the date of the first Advance and (ii)
the date falling 7 days after the date of this Agreement and
on each anniversary of the date of this Agreement until all
moneys owing under this Agreement have been paid in full, for
the account of the Agent, an agency fee of an amount agreed
between the Borrower and the Agent and set out in a letter of
even date herewith; and
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<PAGE>
(c) Commitment commission
in arrears on each Quarter Day after the date of this
Agreement and on the last day of the Revolving Period, for the
account of each Bank, commitment commission computed from the
date of this Agreement at the rate of 0.35 per cent. per annum
on the daily undrawn and uncancelled amount of such Bank's
Commitment provided that commitment commission shall cease to
be payable to any Bank which shall be in breach of its
obligation to make Revolving Advances under this Agreement
with effect from the date of such breach and for so long as
such breach is continuing.
7.2 EXPENSES
The Borrower agrees to pay to the Agent within 30 days from the date on which
the Agent makes demand on the Borrower for payment of the same:
(a) all reasonable out-of-pocket expenses (including legal, other
professional, printing and out-of-pocket expenses) incurred by
the Agent, the Arrangers and the Security Trustee in
connection with the negotiation, preparation (including
reasonable due diligence), syndication and execution of this
Agreement and the Security Documents and of any amendment or
extension of or the granting of any waiver or consent under
this Agreement or any Security Document together with interest
at the rate referred to in clause 5.8 from the date falling 30
days after the date of demand for payment of such expenses to
the date of payment (as well after as before judgment); and
(b) all expenses (including legal and out-of-pocket expenses)
incurred by the Agent, the Arrangers, the Security Trustee and
the Banks or any of them in contemplation of, or otherwise in
connection with, the enforcement of, or preservation of any
rights under, this Agreement or any Security Document, or
otherwise in respect of the moneys owing under this Agreement,
together with interest at the rate referred to in clause 5.8
from the date falling 30 days after the date of demand for
payment of such expenses to the date of payment (as well after
as before judgment).
7.3 VALUE ADDED TAX
All fees and expenses payable pursuant to this clause 7 shall be paid together
with Value Added Tax (if any) properly chargeable thereon.
7.4 STAMP AND OTHER DUTIES
The Borrower agrees (i) to pay all stamp, documentary, registration or other
like duties or taxes (including any duties or taxes payable by the Agent, the
Arrangers, the Security Trustee and the Banks) imposed on or in connection with
this Agreement, any Security Document or the Loan and (ii)
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to indemnify the Agent, the Arrangers, the Security Trustee and the Banks
against any liability arising by reason of any delay or omission by the Borrower
to pay such duties or taxes.
8. PAYMENTS AND TAXES; ACCOUNTS AND CALCULATIONS
8.1 NO SET-OFF OR COUNTERCLAIM; DISTRIBUTION TO THE BANKS
All payments to be made by the Borrower under this Agreement shall be made in
full, without any set-off or counterclaim whatsoever and, subject as provided in
clause 8.7, free and clear of any deductions or withholdings, in Sterling on the
due date to the account of the Agent at such bank in London as the Agent may
from time to time specify for this purpose. Save as otherwise expressly provided
by this Agreement such payments shall be for the account of the Banks and the
Agent shall forthwith distribute such payments in like funds as are received by
the Agent to the Banks rateably in accordance with their Commitments and/or
Contributions, as the case may be.
8.2 PAYMENTS BY THE BANKS
All sums to be advanced by the Banks to the Borrower under this Agreement shall
be remitted in Sterling on the date of the relevant Advance to the account of
the Agent at such bank in London as the Agent may have notified to the Banks and
shall be paid by the Agent on such date in like funds as are received by the
Agent to the account of the Borrower specified in the relevant Drawdown Notice.
8.3 AGENT MAY ASSUME RECEIPT
Where any sum is to be paid under this Agreement to the Agent for the account of
another person, the Agent may assume that the payment will be made when due and
may (but shall not be obliged to) make such sum available to the person so
entitled. If it proves to be the case that such payment was not made to the
Agent, then the person to whom such sum was so made available shall on request
refund such sum to the Agent together with interest thereon sufficient to
compensate the Agent for the cost of making available such sum up to the date of
such repayment and the person by whom such sum was payable shall indemnify the
Agent for any and all loss or expense which the Agent may sustain or incur as a
consequence of such sum not having been paid on its due date.
8.4 NON-BANKING DAYS
When any payment under this Agreement would otherwise be due on a day which is
not a Banking Day, the due date for payment shall be extended to the next
following Banking Day unless such Banking Day falls in the next calendar month
in which case payment shall be made on the immediately preceding Banking Day. If
any date or day specifically referred to in this Agreement (being a date for the
making of any payment under this Agreement) is not a Banking Day all references
thereto shall be deemed to be references to the immediately preceding Banking
Day.
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8.5 CALCULATIONS
All interest and other payments of an annual nature under this Agreement or to
be calculated on an annual basis shall accrue from day to day and be calculated
on the basis of actual days elapsed and a 365 day year.
8.6 CERTIFICATES CONCLUSIVE
Any certificate or determination of the Agent, any Arranger, the Security
Trustee or any Bank as to any rate of interest or any amount payable under this
Agreement shall, in the absence of manifest error, be conclusive and binding on
each TCN Entity and (in the case of a certificate or determination by the Agent)
on the Banks.
8.7 GROSSING-UP FOR TAXES
If at any time the Borrower is required to make any deduction or withholding in
respect of Taxes from any payment due under this Agreement for the account of
any Bank, any Arranger, the Security Trustee or the Agent (or if the Agent is
required to make any such deduction or withholding from a payment to any
Arranger, the Security Trustee or a Bank), the sum due from the Borrower in
respect of such payment shall, subject to clause 8.8, be increased to the extent
necessary to ensure that, after the making of such deduction or withholding,
each Bank, any Arranger, the Security Trustee and the Agent receives on the due
date for such payment (and retains, free from any liability in respect of such
deduction or withholding) a net sum equal to the sum which it would have
received had no such deduction or withholding been required to be made and the
Borrower shall indemnify each Bank, each Arranger, the Security Trustee and the
Agent against any losses or costs incurred by any of them by reason of any
failure of the Borrower to make any such deduction or withholding or by reason
of any increased payment not being made on the due date for such payment. The
Borrower shall promptly deliver to the Agent copies of (or, where required,
originals of) any receipts, certificates or other proof evidencing the amounts
(if any) paid or payable in respect of any deduction or withholding as
aforesaid.
8.8 QUALIFYING BANKS
Each Bank agrees promptly to notify the Borrower if it ceases to be a Qualifying
Bank. If any Bank is not or ceases to be a Qualifying Bank, then (save in
circumstances where such Bank has ceased to be a Qualifying Bank by reason of
any change in any law, directive or regulation or in its application or
interpretation, in each case taking effect after the date of this Agreement) the
Borrower shall not be liable to pay to that bank under clause 8.7 any sum in
excess of the sum it would have been obliged to pay if that Bank had been, or
had not ceased to be, a Qualifying Bank.
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8.9 CLAW-BACK OF TAX BENEFIT
If following any such deduction or withholding as is referred to in clause 8.7
from any payment by the Borrower, the Agent, any Arranger, the Security Trustee
or any Bank shall receive or be granted a credit against or remission for any
taxes payable by it, the Agent, any Arranger, the Security Trustee or such Bank
shall, subject to the Borrower having made any increased payment in accordance
with clause 8.7 and to the extent that the Agent, such Arranger, the Security
Trustee or such Bank can do so without prejudicing the retention of the amount
of such credit or remission and without prejudice to the right of the Agent,
such Arranger, the Security Trustee or such Bank to obtain any other relief or
allowance which may be available to it, reimburse the Borrower with such amount
as the Agent, such Arranger, the Security Trustee or such Bank shall in its
absolute discretion certify to be the proportion of such credit or remission as
will leave the Agent, such Arranger, the Security Trustee or such Bank (after
such reimbursement) in no worse position than it would have been in had there
been no such deduction or withholding from the payment by the Borrower as
aforesaid. Such reimbursement shall be made forthwith upon the Agent, such
Arranger, the Security Trustee or such Bank certifying that the amount of such
credit or remission has been received by it provided that the Agent, the
relevant Arranger, the Security Trustee or the relevant Bank shall not
unreasonably delay before so certifying. Nothing contained in this Agreement
shall oblige the Agent, any Arranger, the Security Trustee or any Bank to
disclose to the Borrower, any other TCN Entity or any other person any
information regarding its tax affairs or tax computations or interfere with the
right of the Agent, such Arranger, the Security Trustee or such Bank to arrange
its tax affairs in whatever manner it thinks fit and, in particular, none of the
Agent, the Arrangers, the Security Trustee or the Banks shall be under any
obligation to claim relief from its corporate profits, tax liability or similar
tax liabilities in respect of such tax in priority to any other claims, reliefs,
credits or deductions available to it. Without prejudice to the generality of
the foregoing, none of the Borrower or any other TCN Entity shall by virtue of
this clause 8.9, be entitled to enquire about the Agent's, any Arranger's, the
Security Trustee's or any Bank's tax affairs.
8.10 BANK ACCOUNTS
Each Bank shall maintain, in accordance with its usual practices, an account or
accounts evidencing the amounts from time to time lent by, owing to and paid to
it under this Agreement. The Agent shall maintain a control account showing the
Loan and other sums owing by the Borrower under this Agreement and all payments
in respect thereof made by the Borrower from time to time. The control account
shall be prima facie evidence as to the amount from time to time owing by the
Borrower under this Agreement.
8.11 PARTIAL PAYMENTS
If, on any date on which a payment is due to be made by the Borrower under this
Agreement, the amount received by the Agent from the Borrower falls short of the
total amount of the payment due to be made by the Borrower on such date then,
without prejudice to any rights or remedies available to the Agent and the Banks
under this Agreement, the Agent shall apply the amount actually received
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from the Borrower in or towards discharge of the obligations of the Borrower
under this Agreement in the following order, notwithstanding any appropriation
made, or purported to be made, by the Borrower:
(a) first, in or towards payment to the Arrangers, of any portion
of the front end fee payable under clause 7.1(a) which shall
have become due but remains unpaid;
(b) secondly, in or towards payment to the Agent, the Arrangers,
the Security Trustee and the Banks, on a pro rata basis, of
any unpaid fees, costs and expenses of the Agent, the
Arrangers, the Security Trustee and the Banks under this
Agreement and any portion of the agency fee payable under
clause 7.1(b) which shall have become due but remains unpaid;
(c) thirdly, in or towards payment to the Banks, on a pro rata
basis, of any accrued commitment commission payable under
clause 7.1(c) which shall have become due but remains unpaid;
(d) fourthly, in or towards payment to the Banks, on a pro rata
basis, of any accrued interest in respect of the Tranche A
Loan which shall have become due but remains unpaid;
(e) fifthly, in or towards payment to the Banks, on a pro rata
basis, of any accrued interest on the Tranche B Loan which
shall have become due but remains unpaid;
(f) sixthly, in or towards payment to the Banks, on a pro rata
basis, of any principal of the Tranche A Loan which shall have
become due but remains unpaid;
(g) seventhly, in or towards payment to the Banks, on a pro rata
basis, of any principal of the Tranche B Loan which shall have
become due but remains unpaid;
(h) eighthly, in or towards payment of any other sum which shall
have become due but remains unpaid (and, if more than one such
sum so remains unpaid, on a pro rata basis).
The order of application set out in this clause 8.11 may be varied by the Agent
if all Banks so direct.
9. REPRESENTATIONS AND WARRANTIES
9.1 REPEATED REPRESENTATIONS AND WARRANTIES
Each TCN Entity severally represents and warrants in respect of itself and, in
the case of the Borrower, each other member of the TCN Group to each of the
Banks, the Arrangers, the Security Trustee and the Agent that:
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(a) Due incorporation of the Borrower and the Charging
Subsidiaries
the Borrower, each Charging Subsidiary and each other
Subsidiary of the Borrower are duly incorporated and validly
existing under the laws of the respective countries of their
incorporation as limited liability companies and have power to
carry on their respective business as they are now being and
hereafter proposed to be conducted and to own their respective
property and other assets;
(b) Power of the Borrower and each Charging Subsidiary
the Borrower and each Charging Subsidiary have all requisite
power to execute, deliver and perform their respective
obligations under this Agreement and the Security Documents to
which they are party including, in the case of the Borrower to
borrow the Commitments; compliance has been made with all
necessary requirements and all necessary corporate,
shareholder or other action has been taken by the Borrower and
each Charging Subsidiary to authorise the execution, delivery
and performance of this Agreement and the Security Documents
to which they are a party; no limitation on the powers of the
Borrower to borrow will be exceeded as a result of borrowings
under this Agreement and notwithstanding the generality of the
foregoing, each Charging Subsidiary (where necessary) has
amended its Articles of Association to permit:
(i) any transfer of its shares in favour of the
Security Trustee (or its nominee) pursuant
to any Security Document; and
(ii) any transfer of its shares where such
transfer is duly executed by the Security
Trustee (or its nominee) pursuant to any
power of sale under any Security Document;
(c) Due formation of Charging Partnerships
each Charging Partnership is a general or limited partnership
duly formed, validly existing and in good standing under the
laws of the State of Colorado or England and having other TCN
Entities (being in the case of the Charging Partnerships
formed in the State of Colorado, the TCN Entities that have
executed or are expected to execute the Pledge and Security
Agreements) as its only partners (there being no outstanding
rights to acquire further interests therein) and has provided
to the Agent a true, correct and complete copy of the
partnership agreement pursuant to which it was formed and
currently exists, as amended to date. Each Charging
Partnership has the power and authority to own its properties
and to carry out its business as it is now being and is
hereafter proposed to be conducted. Each Charging Partnership
is duly qualified, validly existing and in good standing and
authorised to do business in each jurisdiction in which the
character of its properties or the nature of its business
requires such qualification or authorisation;
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(d) Power of the Charging Partnerships
each Charging Partnership has all requisite power to execute,
deliver and perform its obligations under this Agreement and
the Security Documents to which it is a party, compliance has
been made with all necessary requirements and all necessary
action has been taken to authorise the execution, delivery and
performance by each Charging Partnership of this Agreement and
the Security Documents to which it is a party; no resolution
(other than resolutions that have already been adopted) is
required pursuant to the terms of any partnership agreement
forming any Charging Partnership to authorise the execution,
delivery and performance by it of this Agreement and the
Security Documents to which it is a party;
(e) Binding Obligations
this Agreement constitutes valid and legally binding
obligations of each TCN Entity enforceable in accordance with
its terms subject to the qualifications contained in the legal
opinions referred to in Schedule 3 which relate to this
Agreement. The Security Documents to which they are a party
constitute valid and legally binding obligations of each TCN
Entity enforceable in accordance with their respective terms
subject to the qualifications contained in the legal opinions
referred to in Schedule 3 which relate to the relevant
Security Document and for this purpose any statement contained
in the qualifications to any such legal opinion that no
opinion is given or expressed in relation to any particular
matter shall be deemed to be a qualification of such opinion
as regards such matter;
(f) No conflict with other obligations
the execution and delivery of, the performance of their
respective obligations under, and compliance with the
provisions of, this Agreement by each TCN Entity and the
Security Documents to which they are a party by each TCN
Entity will not (i) contravene in any material respect any
existing applicable law, statue, rule or regulation or any
judgment, decree or permit to which any TCN Entity is subject,
(ii) (in the case of the Borrower and each Charging
Subsidiary) contravene or conflict with any provision of the
Memorandum and Articles of Association of the Borrower or any
Charging Subsidiary, (iii) (in the case of each Charging
Partnership) contravene or conflict with any provision of the
partnership agreement of any Charging Partnership, (iv) breach
in any material respect any term of the Licences or the
Necessary Authorisations, (v) conflict with in any material
respect, or result in any breach of any of the terms of, or
constitute a default under any agreement (including any
partnership agreements) to which any TCN Entity is a party or
is subject or by which it or any of its property is bound or
(vi) result in the creation or imposition of or oblige any TCN
Entity, any Subsidiary or Associated Partnership of the
Borrower or any of their respective Associated Companies or
Associated
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Partnerships to create any Encumbrance (other than those
created by the Security Documents) on any TCN Entity, any
Subsidiary or Associated Partnership of the Borrower's or any
of their respective Associated Companies' or Associated
Partnerships' undertakings, assets, rights or revenues;
(g) No litigation
save as disclosed in the Disclosure Letter, no litigation,
arbitration or administrative proceeding is taking place,
pending or, to the knowledge of the officers of any TCN Entity
(as the case may be), threatened against any TCN Entity or
TeleWest which (if adversely determined) would or is
reasonably likely, in the opinion of the Agent, to have a
Material Adverse Effect;
(h) Financial statements
(i) the audited financial statements of the TeleWest
Group, the TCN Group and the Borrower in respect of
the financial year ended on 31 December 1995 as
delivered to the Agent have been prepared in
accordance with GAAP which principles have (save, in
relation to any repetition of this warranty pursuant
to this Agreement, where the Borrower is permitted to
prepare financial statements on a New Basis and is
not required to prepare financial statements on the
Original Basis (each as defined in clause 10.1(i)))
been consistently applied and present fairly and
accurately the financial position of each such entity
as at such date and the results of the operations of
each such entity respectively for the financial year
ended on such date and, as at such date, no such
entity had any significant liabilities (contingent or
otherwise) nor any significant unrealised or
anticipated losses, which, in any such case, are not
disclosed by, or reserved against in, such financial
statements;
(ii) the pro forma consolidated financial projections for
the financial years ending 31 December 1996 to 31
December 2006 inclusive for the TCN Group and the
operating statistics projections for each Region for
such financial years, and the Agreed Base Case have
been prepared based upon historical financial
information and upon the assumptions set forth
therein, which assumptions were reasonable both when
made and are reasonable on the date hereof;
(i) No filing required
it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Agreement
or any of the Security Documents that any of them or any other
instrument be notarised, filed, recorded, registered or
enrolled in any court or public office (save for (i) the
registration of the Debenture, the Pledge and Security
Agreements, the TeleWest Assignment and the Scottish Security
Documents pursuant
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to Section 395 or 410 Companies Act 1985 and, in the case of
(1) the Debenture, pursuant to the Land Registration Act 1925
and the Land Charges Act 1925 and regulations made thereunder
and (2) the Standard Securities, the recording thereof in the
Register of Sasines or registration thereof in the Land
Register for Scotland (as appropriate) and (ii) the filing of
UCC-1 Financing Statements and continuation statements with
respect to the Pledge and Security Agreements pursuant to the
Colorado Uniform Commercial Code);
(j) Choice of law
the choice by each TCN Entity of English law to govern this
Agreement and the Security Documents to which they are a party
(other than the Pledge and Security Agreements and the
Reimbursement Agreement, under which Colorado law is to govern
and the Scottish Security Documents, under which Scots law is
to govern) and the submission by such TCN Entity to the
jurisdiction of the English courts, are valid and binding
subject to the qualifications contained in the legal opinions
referred to in Schedule 3 which relate to this Agreement or
the Security Documents and for this purpose any statement
contained in the qualifications to any such legal opinion that
no opinion is given or expressed in relation to any particular
matter shall be deemed to be a qualification of such opinion
as regards such matter;
(k) Legal and beneficial owners
save as disclosed in the Disclosure Letter and subject to any
Permitted Encumbrances, the TCN Entities are the legal and
beneficial owners of and have good and marketable title to all
their respective properties and other material assets free
from any Encumbrances;
(l) No material adverse change
there has been no adverse change in the financial position of
the TCN Group from that set forth in the financial statements
referred to in clause 9.1(h)(i) and there has been no adverse
change in the operations or business prospects of the TCN
Group from that set forth in such financial statements which,
in either case, would or is reasonably likely, in the opinion
of the Agent, to have a Material Financial Adverse Effect;
(m) Solvency
after giving effect to the transactions contemplated hereby,
the Revolving Advances to be made hereunder and the
application of the proceeds thereof, and taking into account
the execution, delivery and effectiveness of the Reimbursement
Agreement, (i) on a pro forma basis, the fair value and the
present fair saleable value of each
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Associated Partnership's assets will exceed that Associated
Partnership's stated liabilities and identified contingent
liabilities, (ii) each Associated Partnership will have the
ability to pay its debts as they become absolute or mature,
and (iii) the capital or assets remaining in each Associated
Partnership after consummation of the transactions
contemplated hereby will not be unreasonably small to conduct
that Associated Partnership's business as it is now conducted
and is proposed to be conducted during the term hereof;
(n) Compliance with Environmental Laws and Licences
each member of the TCN Group:
(i) complies and has at all times complied with all
Environmental Laws and Environmental Licences and all
other laws, regulations and judgments (other than
Telecommunications and Cable Laws) the breach of
which would or is reasonably likely to have a
Material Financial Adverse Effect; and
(ii) has obtained and maintains in full force and effect
all Environmental Licences, and there are no facts or
circumstances entitling any such Environmental
Licences to be revoked, suspended, amended, varied,
withdrawn or not renewed where such revocation,
suspension, amendment, variation, withdrawal or
non-renewal, would or is reasonably likely to have a
Material Financial Adverse Effect;
(o) Environmental Claim
no Environmental Claim is pending or has been made or
threatened against any member of the TCN Group or any of their
respective officers or any occupier of any property owned or
leased by any member of the TCN Group and no member of the TCN
Group has any reason to believe that it or, in the case of the
Borrower, any of its Subsidiaries or Associated Partnerships
has or is likely to have any liability in relation to
Environmental Matters which would or is reasonably likely to
have a Material Financial Adverse Effect;
(p) Deposit of Relevant Substance
to the best of its knowledge and belief, no Relevant Substance
has been deposited, disposed of, kept, treated, imported,
exported, transported, processed, manufactured, used,
collected, sorted or produced at any time, or is present in
the environment (whether or not on property owned, leased,
occupied or controlled by any member of the TCN Group) in
circumstances which are likely to result in an Environmental
Claim against any member of the TCN Group which would, or is
reasonably likely to have a Material Financial Adverse Effect;
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(q) Disclosure of inspection results
full details have been given to the Agent of any inspections,
investigations, studies, audits, tests, reviews or other
analyses in relation to Environmental Matters relating to any
member of the TCN Group or to the best of the knowledge of any
member of the TCN Group (as the case may be) any property now
owned, leased or occupied by any member of the TCN Group and
of all Environmental Licences which disclose any matters which
would or would be reasonably likely to have a Material
Financial Adverse Effect;
(r) Intellectual Property Rights
(i) the Intellectual Property Rights owned by each member
of the TCN Group are free from any Encumbrance (save
for those created or to be created by or pursuant to
the Security Documents) and any other rights or
interests in favour of third parties;
(ii) the Intellectual Property Rights owned by each member
of the TCN Group are all the Intellectual Property
Rights required by them in order to carry on,
maintain and operate in all material respects their
respective businesses, properties and assets and no
member of the TCN Group in carrying on its business
infringes any Intellectual Property Rights of any
third party where any action taken by such third
party in respect of any such infringement would or is
reasonably likely to have a Material Financial
Adverse Effect; and
(iii) no Intellectual Property Rights owned by each member
of the TCN Group are being infringed, nor is there
any threatened infringement of any such Intellectual
Property Rights which, in either case would or is
reasonably likely to have a Material Financial
Adverse Effect; and
(s) Copyright matters
save as disclosed in the Disclosure Letter, each member of the
TCN Group has obtained all consents and taken all other action
required in connection with the secondary transmission by it
of any broadcast television signals and no member of the TCN
Group has any knowledge, nor is it aware of any claim, that it
is or may be liable to any person for any copyright
infringement of any nature whatsoever as a result of the
operation of its business which liability in the opinion of
the Agent would or is reasonably likely to have a Material
Financial Adverse Effect.
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9.2 FURTHER REPRESENTATION AND WARRANTIES
Each TCN Entity severally further represents and warrants in respect of itself
and, in the case of the Borrower, each other member of the TCN Group to each of
the Banks, the Arrangers, the Security Trustee and the Agent that:
(a) Principal Agreements
save as disclosed in the Disclosure Letter (i) the Principal
Agreements which have been entered into on or prior to the
date of this Agreement are in full force and effect and (ii)
to the best of its knowledge and belief after due enquiry, (1)
no party is in breach of the terms thereof, (2) there is no
dispute subsisting between the parties thereto and (3) no
amendments have been made thereto (save for any amendments
thereto referred to in Schedule 10 to this Agreement);
(b) Licences and Necessary Authorisations
the Licences are in full force and effect and each TCN Entity
(as the case may be) is in compliance in all material respects
with all provisions thereof. Save as set out in the Disclosure
Letter, each TCN Entity has secured all the Necessary
Authorisations, all such Necessary Authorisations are in full
force and effect and each TCN Entity is in compliance in all
material respects with all provisions thereof. To the best of
the knowledge of the TCN Entity, neither the Licences nor any
of the Necessary Authorisations are the subject of any pending
or threatened attack or revocation;
(c) Consents obtained
every consent, authorisation, licence or approval of, or
registration with or declaration to, governmental or public
bodies or authorities or courts (other than the Licences and
the Necessary Authorisations) required by each TCN Entity to
authorise, or required by each TCN Entity in connection with,
the execution, delivery, validity, enforceability or
admissibility in evidence of this Agreement and the Security
Documents to which they are a party or the performance by each
TCN Entity of their respective obligations under this
Agreement and the Security Documents (other than (i) the
registration of the Debenture, the Pledge Security Agreements,
the TeleWest Assignment and the Scottish Security Documents
pursuant to Section 395 or 410 of the Companies Act 1985 and,
in the case of (1) the Debenture, pursuant to the Land
Registration Act 1925 and the Land Charges Act 1925 and
regulations made thereunder and (2) the Standard Securities,
the recording thereof in the Register of Sasines or
registration thereof in the Land Register for Scotland (as
appropriate) and (ii) the filing of UCC-1 Financing Statements
with respect to the Pledge and Security Agreements pursuant to
the Colorado Uniform Commercial Code) has been obtained or
made and is in full force and effect and there has been no
material default in the
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observance of the conditions or restrictions (if any) imposed
in, or in connection with, any of the same;
(d) Contractual commitments
no dividends of the Borrower or repayments of the capital
contributions made by TeleWest to the Borrower or any other
rights or benefits have been declared, made or paid by the
Borrower and no member of the TCN Group has entered into any
contractual commitments of a material nature (other than (i)
the Principal Agreements, (ii) for the purpose of carrying out
the business of constructing, installing and operating cable
television and telecommunications systems in the TCN
Franchises or such other business as is permitted by the terms
of this Agreement or (iii) contractual commitments arising
pursuant to or constituting Permitted Borrowings, Permitted
Disposals, Permitted Guarantees, Permitted Intra-TCN Group
Transactions, Permitted Investments or Permitted
Encumbrances);
(e) No withholding Taxes
as at the date of this Agreement, on the basis that all of the
Banks are Qualifying Banks, no Taxes are imposed by
withholding or otherwise on any payment to be made to the
Agent, the Arrangers, the Security Trustee or the Banks by any
TCN Entity under this Agreement or any Security Document to
which any of them is a party or are imposed on or by virtue of
the execution or delivery by any TCN Entity of this Agreement
or any Security Document to which any of them is a party or
any document or instrument to be executed or delivered under
this Agreement or any such Security Document (other than stamp
duty payable on any Security Document);
(f) Telecommunications and Cable Laws
each member of the TCN Group complies and has at all times
complied in all material respects with all Telecommunications
and Cable Laws but excluding, for these purposes only,
breaches of Telecommunications and Cable Laws which have been
expressly waived by the relevant regulatory authority;
(g) No Default
no Default has occurred and is continuing which has not been
expressly waived;
(h) Information Memorandum
subject to the next paragraph, to the best of the Borrower's
knowledge and belief after due enquiry, as at the date of the
Information Memorandum the factual information contained in
the Information Memorandum was true and accurate in all
material
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respects and not misleading in any material respect and the
Information Memorandum does not omit any material facts; all
reasonable enquiries have been made by the Borrower to verify
the facts and statements contained therein; all opinions,
projections and forecasts contained therein and the
assumptions on which such opinions, projections and forecasts
were based were arrived at after due and careful consideration
and enquiry and represent the views of the Borrower as at the
date of the Information Memorandum; there are no material
facts or circumstances which have not been disclosed to the
Arrangers prior to the date hereof the omission of which would
make any material factual information contained in the
Information Memorandum inaccurate or misleading in any
material respect either as at the date of the Information
Memorandum or as at the date of this Agreement or any of the
opinions, projections and forecasts contained in the
Information Memorandum (and the assumptions on which such
opinions, projections and forecasts were made) misleading in
any material respect either as at the date of the Information
Memorandum or as the date of this Agreement.
No warranty or representation is made in respect of (i) any
information, facts, statements, opinions, projections,
forecasts, demographic statistics or circumstances relating to
the cable and telecommunications industry as a whole
("Information"), (ii) any person other than TeleWest, the
Borrower and members of the TCN Group or (iii) any Information
which is in the public domain or which is identified in the
Information Memorandum as having been obtained from or made by
a source, or being those of a person, other than the Borrower,
any other member of the TCN Group or TeleWest;
(i) Carry on business solely in UK
each of the TCN Entities (i) does not employ any employees in
the State of Colorado or elsewhere in the United States of
America and (ii) carries on business solely in, and its
principal places of business, books and records and the
property (other than the interests in the Original Charging
Partnerships) subject to the Security Documents are located
in, the United Kingdom (except that, in the case of any
Charging Partnership formed in the State of Colorado, if it
maintains an office in the United States of America, it
maintains such office in the State of Colorado). Control and
management of each of the TCN Entities takes place outside the
United States of America; and
(j) Immaterial Group Entities
each member of the TCN Group (other than Cable Guide Limited
(registered no. 2025654)) which is not an Immaterial Group
Entity is a party to this Agreement and each Original
Non-Charging Subsidiary (other than Cable Guide Limited) is an
Immaterial Group Entity.
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9.3 REPETITION
The representations and warranties in clause 9.1 (and so that (i) the
representation and warranty in clause 9.1(h)(i) shall for this purpose refer to
the then latest audited financial statements of the Borrower or the latest
consolidated financial statements of the TCN Group or the TeleWest Group (as
applicable) verified by the auditors of the TCN Group and delivered to the Agent
under clause 10.1, (ii) the representation and warranty contained in clause
9.1(h)(ii) shall for this purpose refer to the then latest pro forma
consolidated financial projections of the TCN Group and the then latest
operating statistics projections for each Region and shall not include a
representation or warranty as to the Agreed Base Case, and (iii) the
representation and warranty in clause 9.1(l) shall for this purpose refer to the
latest audited financial statements of the TCN Group delivered to the Agent
under clause 10.1) shall be deemed to be repeated by each TCN Entity in respect
of itself on and as of each Interest Payment Date and the date on which each
Advance is made under this Agreement. Additionally, the Borrower shall be deemed
to represent and warrant as at each such date in respect of the then latest
audited and/or verified financial statements delivered to the Agent under clause
10.1(f) that (A) such financial statements have been prepared in accordance with
GAAP which have been consistently applied (save as provided for in Clause
10.1(i)) and present fairly and accurately the financial position of the
Borrower and the consolidated financial position of the TCN Group and the
TeleWest Group respectively as at the dates to which such financial statements
were made up and the results of the operations of the Borrower and the
consolidated results of the operations of the TCN Group and the TeleWest Group
respectively for the financial year ended on such date and that as at such date,
neither the Borrower nor any member of the TCN Group nor the TeleWest Group had
any significant liabilities (contingent or otherwise) which are not disclosed
by, or reserved against in, such financial statements (or the notes thereto) and
neither the TCN Group nor the TeleWest Group had any unrealised or anticipated
losses and (B) there has been no adverse change in the financial position of the
Borrower or the consolidated financial position of the TCN Group or the TeleWest
Group from that set forth in the latest set of financial statements delivered
pursuant to clause 10.1(f) and there has been no adverse change in the
operations or business prospects of the Borrower or the TCN Group or the
TeleWest Group from that set forth in such financial statements which, in either
case, would or is reasonably likely to have a Material Financial Adverse Effect.
10. POSITIVE COVENANTS
10.1 COVENANTS
Each TCN Entity jointly and severally undertakes with each of the
Banks, each of the Arrangers, the Security Trustee and the Agent that
they will from the date of this Agreement and so long as any monies are
owing under this Agreement or any part of the Commitments remains
outstanding:
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(a) Notice of Default, etc.
promptly inform the Agent of (i) any occurrence of which it
becomes aware which would or is reasonably likely to have a
Material Adverse Effect (ii) any Default and any potential
breach of any of the undertakings set out in clause 12
forthwith upon becoming aware thereof and will from time to
time, if so requested by the Agent, confirm to the Agent in
writing that, save as otherwise stated in such confirmation,
no Default has occurred and is continuing, (iii) any lapse,
suspension or termination of or refusal by any person to renew
or extend any Licence or Necessary Authorisation or any breach
of any Licence or Necessary Authorisation where any such
breach would or is reasonably likely to have a Material
Adverse Effect, (iv) (to the extent known to any TCN Entity)
the commencement of all proceedings and investigations by or
before any governmental body and all actions and proceedings
in any court or before any arbitrator where any such
proceedings, investigations or actions would, if adversely
determined, have a Material Adverse Effect (v) any application
of which it becomes aware for any other licence or franchise
agreement by means of cable television systems (including
satellite master antennae television systems and multi-point
microwave distribution systems) with respect to the territory
covered by the Licences where any such application, if
successful, would or is reasonably likely to have a Material
Adverse Effect and (vi) any breach of any Telecommunications
and Cable Laws by any member of the TCN Group which would or
is reasonably likely to have a Material Adverse Effect.
(b) Consents and authorisations
obtain or cause to be obtained (i) every consent,
authorisation, licence (other than a Licence or a renewal or
extension thereof) or approval of, or registration with or
declaration to, governmental or public bodies or authorities
or courts and (ii) every notarisation, filing, recording,
registration or enrolment in any court or public office in the
United Kingdom (in any such case) required by any TCN Entity
or TeleWest to authorise the execution, delivery, validity,
enforceability or admissibility in evidence of this Agreement
and the Security Documents or the performance by any TCN
Entity or TeleWest of their respective obligations under this
Agreement and the Security Documents to which they are a
party;
(c) Licences
(i) obtain or cause to be obtained every Licence
and ensure that (A) where there are any
Subscribers within the relevant TCN
Franchise subscribing for services covered
by a Licence, (1) such Licence is not
revoked, cancelled, suspended, withdrawn,
terminated, expires or otherwise ceases to
be in full force and effect unless the same
is, prior to or contemporaneously with such
event, renewed or replaced and (2)
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none of the DTI, ITC, OFTEL nor any other
relevant authority issues any notice in
respect of any TCN Franchise informing any
TCN Entity that it has or will (whether or
not following the failure to satisfy certain
conditions) revoke, cancel, suspend,
withdraw, terminate or not permit the
renewal of such Licence (whether or not such
notice gives any TCN Entity a period within
which to remedy the matter which gave rise
to such notice) and (B) such Licence is not
modified and no TCN Entity commits any
breach of the terms or conditions thereof
(including, without limitation, any failure
to meet the milestones referred to therein)
where any such modification, breach or
failure would or is reasonably likely, in
the opinion of the Agent, to have a Material
Financial Adverse Effect;
(ii) apply to extend or renew each Licence no
later than 12 months before the date on
which the same is scheduled to expire and
take all steps required by
Telecommunications and Cable Laws and all
other steps reasonably necessary to effect
the extension or renewal of the same for a
period extending at least 24 months after
the scheduled final repayment date of the
Tranche B Loan;
(d) Necessary Authorisations
obtain or cause to be obtained every Necessary Authorisation
and ensure that (i) none of the Necessary Authorisations is
revoked, cancelled, suspended, withdrawn, terminated, expires
and is not renewed or otherwise ceases to be in full force and
effect and (ii) no Necessary Authorisation is modified and no
TCN Entity commits any breach of the terms or conditions of
any Necessary Authorisation which, in the case of any of the
actions or events referred to in either (i) or (ii), would or
is reasonably likely, in the opinion of the Agent, to have a
Material Adverse Effect;
(e) Business of the Borrower and the Charging Subsidiaries
in the case of the Charging Subsidiaries and Charging
Partnerships, engage in the business of acting as the holder
of shares and/or partnership interests in other TCN Entities
and/or the business of constructing, installing, operating and
utilising cable television and telecommunications systems in
the TCN Franchises and in no other activities save for any
directly related business reasonably considered to be
financially beneficial to such business; in the case of the
Borrower engage in the business of acting as the holding
company of its Subsidiaries and Associated Partnerships (which
shall include the raising of Permitted Borrowings and the
onlending of such Borrowed Money to TCN Entities or to
TeleWest in accordance with the provisions of this Agreement)
and in no other activities;
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(f) Financial statements
prepare financial statements of the Borrower and consolidated
financial statements of the TeleWest Group and the TCN Group
in accordance with GAAP and cause such financial statements to
be reported on by their respective auditors and deliver to the
Agent sufficient copies of the same for distribution to all of
the Banks as soon as practicable but not later than 180 days
after the end of the financial year to which they relate.
(g) Quarterly Management Accounts
in respect of each Quarterly Period, prepare unaudited
consolidated Quarterly Management Accounts for the TCN Group
and the TeleWest Group in each case containing information of
the same type and to the same level of detail as in the format
agreed with the Arrangers (including, without limitation, a
profit and loss account, balance sheet, cash flow statement
and, in relation to each Region, a summary of operating
statistics in the agreed form and, in the case of the last
Quarterly Period of each financial year, a profit and loss
account, balance sheet and cash flow statement for that
financial year in the agreed form) or omitting any such
information or detail or containing such other information or
to such other level of detail or containing such other
information or to such other level of detail as may, from time
to time, be approved by the Agent (acting on the instructions
of the Majority Banks) in writing and deliver a copy of the
same to the Agent for distribution to all of the Banks as soon
as practicable but not later than 30 days (in the case of the
last Quarterly Period of each financial year, 50 days) after
the Quarterly Period to which they relate;
(h) Monthly Management Accounts
in respect of each calendar month ending during the Revolving
Period (and in respect of each calendar month after the end of
the Revolving Period for which the Borrower so chooses),
prepare unaudited consolidated Monthly Management Accounts for
the TCN Group in each case containing information of the same
type and to the same level of detail as in the format agreed
with the Arrangers (including, without limitation, a profit
and loss account, balance sheet and cash flow statement) or
omitting any such information or detail or containing such
other information or to such other level of detail or
containing such other information or to such other level of
detail as may, from time to time, be approved by the Agent
(acting on the instructions of the Majority Banks) in writing
and deliver a copy of the same to the Agent for distribution
to all of the Banks as soon as practicable but not later than
30 days (in the case of the last calendar month of each
financial year 50 days) after the calendar month to which they
relate;
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(i) Change in basis of accounts
the Borrower shall ensure that all financial statements
delivered under Clause 10.1(f) are prepared in accordance with
GAAP and in accordance with the accounting principles and
practices used in the preparation of the financial statements
referred to in clause 9.1(h)(i) and the 1996 Budget (the
"ORIGINAL BASIS") consistently applied in respect of each
financial year unless to do so would be inconsistent with then
current GAAP (the "NEW BASIS"). If the preparation of
financial statements on the Original Basis is contrary to New
Basis then the Borrower shall promptly notify the Agent in
writing of the relevant change and (at the option of the
Borrower) shall either (1) prepare and deliver to the Agent
audited financial statements on both the Original Basis and
the New Basis (or shall prepare and deliver financial
statements on the New Basis only but shall also prepare and
deliver an audited reconciliation statement (a "RECONCILIATION
STATEMENT") showing those adjustments necessary in order to
reconcile the financial statements produced on the New Basis
to the Original Basis) or (2) request the Agent to enter into
good faith negotiations for such amendment (if any) as are
necessary to the covenants contained in Clause 12.1 and any
other provisions of this Agreement affected by such change, in
which event the Agent will enter into such negotiations for a
period of not more than 28 days. If agreement is reached
between the Borrower and the Agent (acting on the instructions
of the Majority Banks) within such period as to the amendment
of any such covenants or provisions, then the parties hereto
will enter into such documentation and take such other steps
as are required to put such amendments into effect following
which the Borrower shall then be obliged to produce financial
statements on the New Basis only. If no such agreement is
reached then the Borrower shall be obliged to prepare and
deliver financial statements on both the Original Basis and
the New Basis (or shall prepare and deliver audited financial
statements on the New Basis accompanied by a Reconciliation
Statement).
Where the Borrower is under an obligation to deliver financial
statements under clause 10.1(f) on both the Original Basis and
the New Basis (or on the New Basis but accompanied by a
Reconciliation Statement), Monthly Management Accounts and
Quarterly Management Accounts shall also be delivered on both
bases or on the New Basis but accompanied by a Reconciliation
Statement.
All financial statements, Quarterly Management Accounts,
Monthly Management Accounts and Reconciliation Statements
delivered pursuant to this clause 10.1(i) shall be delivered
within the relevant time period set out in clause 10.1.
The provisions of this clause 10.1(i) shall also apply,
mutatis mutandis, to the preparation and delivery of the
Annual Budget under clause 10.1(j)(a)(iii).
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(j) Delivery of reports
deliver to the Agent, for distribution to the Banks (in the
case of a Compliance Certificate issued by the auditors of the
TCN Group) sufficient copies for all of the Banks or (in any
other case):
(a) each of the following documents, in each case at the
time of issue thereof or (in the case of the
Compliance Certificates referred to in (ii) below)
together with the financial statements prepared in
respect of each financial year and Quarterly
Management Accounts prepared in respect of each
Quarterly Period pursuant to clause 10.1(g) in
respect of the financial period to which such
Compliance Certificate relates:
(i) every document issued by the Borrower to its
shareholders (in their capacity as a
shareholder) or issued by the Borrower or
any of its Subsidiaries or Associated
Partnerships to its creditors generally;
(ii) a Compliance Certificate stating that the
Borrower and each other member of the TCN
Group as at the last day of the financial
period to which such financial statements or
Quarterly Management Accounts relate were in
compliance with the relevant covenants and
undertakings in clause 12 (or if it was not
in compliance indicating the extent of the
breach);
(iii) an Annual Budget for each financial year for
the TCN Group no later than 45 days after
the beginning of such financial year; and
(iv) no later than 90 days after the end of each
financial year, revised financial
projections and revised projections for
operating statistics in relation to the TCN
Group containing information of the same
type and to the same level of detail as the
base case financial projections and
operating statistics projections contained
in the Agreed Base Case, such projections to
extend to at least the earlier of (a) ten
years from the end of such financial year
and (b) 31 December 2007 and to contain
details of the assumptions on the basis of
which such projections have been prepared
and an explanation of any discrepancies from
the most recently delivered financial
projections and projections for operating
statistics delivered under this sub-
paragraph (j)(iv) (or, in the case of the
first such financial projections, from the
base case financial projections or operating
statistics projections (as the case may be)
contained in the Agreed Base Case); and
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(b) sufficient copies for all of the Banks of every
document or announcement issued by TeleWest to its
shareholders generally or made available by TeleWest
to the public where any such document or announcement
relates to the financial position or prospects of
TeleWest;
(k) Financial Year End
maintain a financial year end of 31 December for each TCN
Entity;
(l) Authorised Officers
ensure that any new or replacement Authorised Officer has
provided the Agent with evidence satisfactory to it of such
new officer(s)' authority and a specimen of his or their
signature(s) prior to signing any Compliance Certificates,
Drawdown Notices, Rollover Notices, Conversion Notices or any
other notices, requests or confirmations referred to in this
Agreement or relating to the facility granted pursuant to this
Agreement;
(m) Auditors
ensure that KPMG Peat Marwick is appointed as auditors of each
TCN Entity and not change such appointment without appointing
a major firm of recognised international standing and repute;
(n) Provision of Further Information
notify the Agent of any change to the business of any TCN
Entity where due to such change such business would thereafter
be carried on in a different Region providing details of such
change as soon as practicable after making such change and
provide the Agent with a copy of (i) each Principal Agreement
entered into after the date of this Agreement and (ii) any
material report, notice or other communication relating to the
Licences, the Necessary Authorisations and such financial and
other information concerning each TCN Entity and their
respective affairs as the Agent or any Bank (acting through
the Agent) may from time to time reasonably require;
(o) Insurance
maintain insurance cover in accordance with the terms and
conditions of the Security Documents and ensure that such
insurance cover is governed by English law;
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(p) Inspection
permit representatives of the Agent or any of the Banks upon
three Banking Days' prior written notice to the Borrower and
after having made arrangements with the Borrower so to do to
(a) visit and inspect the properties of any TCN Entity during
normal business hours, (b) inspect and make extracts from and
copies of its books and records and (c) discuss with its
principal officers and auditors, its business, assets,
liabilities, financial position, results of operations and
business prospects;
(q) Notification of Environmental Claim and Expenditure
promptly on becoming aware of it inform the Agent of any
Environmental Claim which has been made or threatened against
any member of the TCN Group or any occupier of any property
owned or leased by any member of the TCN Group or any
requirement by any Environmental Licence or applicable
Environmental Laws for any member of the TCN Group to make any
investment or incur any expenditure in excess of
(pound)500,000 in aggregate in any calendar year or to take or
desist from taking any action which would or is reasonably
likely, if substantiated, to have a Material Financial Adverse
Effect;
(r) Delivery of Environmental Licences and other information
promptly on receipt provide the Agent with copies of all
material Environmental Licences and the terms and conditions
thereof and any material amendments thereto;
(s) Compliance with laws and regulations
comply with the terms and conditions of all laws (other than
Telecommunications and Cable Laws, the Licences and the
Necessary Authorisations including any milestone requirements
in respect thereof), regulations, agreements, licences and
concessions including, without limitation, all Environmental
Laws and all Environmental Licences if the failure to comply
therewith, would or is reasonably likely, in the opinion of
the Agent, to have a Material Financial Adverse Effect;
(t) Relevant Substance
notify the Agent forthwith upon becoming aware of any Relevant
Substance at or brought on to any property owned, leased or
occupied by any member of the TCN Group which is likely to
give rise to an Environmental Claim which would or is
reasonably likely to have a Material Financial Adverse Effect
and take or procure the taking of all necessary action to deal
with, remedy or remove from such property or prevent the
incursion of (as the case may be) that Relevant Substance in
order to
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prevent such an Environmental Claim and in a manner that
complies with all requirements of Environmental Law;
(u) Taxes
file or cause to be filed all tax returns required to be filed
in all jurisdictions in which it is situated or carries on
business or is otherwise subject to Taxation and will pay all
Taxes shown to be due and payable on such returns or any
assessments made against it within the period stipulated for
such payment (other than those being contested in good faith
and where such payment may be lawfully withheld);
(v) Cost capitalisation policy
maintain a cost capitalisation policy consistent with the cost
capitalisation policy used in the preparation of the financial
statements referred to in clause 9.1(h)(i) or such other cost
capitalisation policy as may be approved by the auditors and
the Agent (acting on the instructions of the Majority Banks)
from time to time;
(w) Use of Proceeds
ensure that the Borrower uses the Loan exclusively for the
purposes specified in clause 1.1;
(x) New TCN Entities
it will and will procure that each Subsidiary or Associated
Partnership that is or becomes a member of the TCN Group
(other than an Immaterial Group Entity unless such Immaterial
Group Entity no longer complies with the definition of
Immaterial Group Entity) and which is not already a party to
this Agreement promptly upon such Subsidiary or Associated
Partnership becoming a member of the TCN Group, executes and
delivers a Supplemental Deed and provides the Agent with such
evidence as it may reasonably request as to the power and
authority of such party to enter into such Supplemental Deed
and that such Supplemental Deed constitutes (subject to any
qualifications contained in any legal opinions delivered in
connection therewith and reasonably acceptable to the Majority
Banks and for this purpose any statement contained in the
qualification to any such legal opinion that no opinion is
given or expressed in relation to any particular matter shall
be deemed to be a qualification of such opinion as regards
such matter) valid and legally binding obligations of such
party enforceable in accordance with its terms. The parties
hereto agree that upon the execution and delivery of such
Supplemental Deed by all parties thereto such Subsidiary or
Associated Partnership shall become a party to this Agreement
as a TCN Entity and a party to each relevant Security Document
as a chargor;
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(y) Maintain Operating Capacity
ensure that the TCN Group will maintain:
(i) managerial, subscriber and technical
services from time to time sufficient, in
the reasonable opinion of the Borrower to
meet the projected demand from Subscribers
for cable television and telephony services
at that time; and
(ii) switch capacity from time to time
sufficient, based on the projections most
recently delivered under Clause
10.1(j)(a)(iv) (or, if none, the projections
contained in the Agreed Base Case), to meet
the projected demand from Subscribers for
cable telephony services at that time;
(z) Reimbursement Agreement
comply with their respective obligations under the
Reimbursement Agreement and not assign or transfer all or any
part of their respective rights and/or obligations under the
Reimbursement Agreement or amend, vary or waive all or any of
the provisions of the Reimbursement Agreement; and
(aa) Agreed Hedging Programme
as from the first Drawdown Date, maintain interest rate
hedging with a Bank in accordance with the following
principles:
(i) Fixed Rate (not including the Margin): In
respect of hedging outstandings at any time,
no more than 2% over the swap yield curve
for the relevant time at the date of entry
into the hedging instrument first entered
into in respect of outstandings at such
future date;
(ii) Period: Minimum of 3 years hence at any
time;
(iii) Notional Principal Amount: At any time no
less than 50% of the forecasted amount of
the Loan from time to time outstanding over
the following 3 year period as set out in
the Agreed Base Case.
11. NEGATIVE COVENANTS
11.1 COVENANTS
Each TCN Entity jointly and severally undertakes with each of the Banks, each of
the Arrangers, the Security Trustee and the Agent from the date of this
Agreement and so long as any monies are owing
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under this Agreement or any of the Commitments remain outstanding that, without
the prior written consent of the Agent acting on the instructions of the
Majority Banks:
(a) Negative Pledge
they will not permit any Encumbrance (other than Permitted
Encumbrances) by any member of the TCN Group to subsist, arise
or be created or extended over all or any part of their
respective present or future undertakings, assets, rights or
revenues to secure or prefer any present or future
Indebtedness of any member of the TCN Group or any other
person;
(b) No Merger
they will procure that no member of the TCN Group merges or
consolidates with any other company or person;
(c) Disposals
they will procure that no TCN Entity sells, transfers, leases,
lends or otherwise disposes of or ceases to exercise control
over the whole or any part of their present or future
undertakings, assets, rights or revenues whether by one or a
series of transactions related or not other than Permitted
Disposals, provided that in the case of any Permitted
Intra-TCN Group Transaction which involves any asset of any
nature being transferred by any means whatsoever (directly or
indirectly) by the Borrower, an Original Charging Subsidiary
or an Original Charging Partnership to another TCN Entity (not
being the Borrower, an Original Charging Subsidiary or an
Original Charging Partnership), the relevant transfer must be
made expressly subject to the security interests granted under
the Security Documents;
(d) Borrowed Money
they will procure that no member of the TCN Group creates,
assumes, incurs or otherwise permits to be outstanding any
Borrowed Money other than Permitted Borrowings;
(e) Guarantees
they will procure that no member of the TCN Group incurs any
obligations or assumes any liability under any guarantee other
than Permitted Guarantees;
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(f) Issue of Shares
neither the Borrower nor any other member of the TCN Group
issues any shares of any class provided that the Borrower may
issue shares to TeleWest and any member of the Group may issue
shares to any TCN Entity provided that such shares are charged
in favour of the Security Trustee pursuant to the terms of a
Security Document and there is delivered at the same time to
the Security Trustee the relevant share certificates and blank
stock transfer forms in respect thereof;
(g) Investments
they will procure that no member of the TCN Group (i) makes
any loan or advance to, or enters into any transaction having
the effect of lending money with, any person or otherwise
acquires for a consideration any document evidencing
Indebtedness, capital stock or other securities of any person
or (ii) acquires all or any substantial part of the assets,
property or business of any other person or any assets that
constitute a division or operating unit of the business of any
other person or creates or acquires any Subsidiary or
Associated Partnership other than in the case of any of (i)
and (ii) above, Permitted Investments;
(h) Capital Expenditure
they will procure that no member of the TCN Group incurs any
capital expenditure other than (a) in relation to the business
of constructing, installing, operating and utilising cable
television and telecommunications systems in the area
permitted by the Licences or any directly related business
reasonably considered to be financially beneficial thereto or
(b) in Permitted Investments provided that no capital
expenditure may be incurred or Permitted Investment made in
relation to TeleWest (Worcester) Limited (No. 0247098) until
such time as licences are issued to such Company pursuant to
both the Broadcasting Act 1990 and the Telecommunications Act
1984 in relation to a cable television and telecommunications
system;
(i) Swaps and Hedging
they will procure that no member of the TCN Group enters into
any interest rate or currency swaps or other hedging
arrangements other than in the case of a TCN Entity (i)
directly relating to the risk management of any Borrowed Money
permitted to subsist by the terms of this Agreement or (ii)
forward foreign exchange contracts entered into in the normal
course of business in relation to future liabilities of such
TCN Entity incurred in relation to the construction,
maintenance or operation of the Cable Systems up to an
aggregate notional principal amount at any time outstanding of
(in respect of all such contracts entered into by TCN
Entities) (pound)80,000,000, for a
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period not in excess of 15 months and having an average life
not in excess of nine months;
(j) Change of Business
they will procure that the TCN Group (taken as a whole) does
not change the nature of the business carried on by it in any
material respect from that carried on at the date of this
Agreement and that no TCN Entity ceases to carry on a business
where any such cessation would or is reasonably likely to have
a Material Adverse Effect;
(k) Memoranda and Articles of Association; Partnership Agreements
the Borrower will not, and will procure that no Charging
Subsidiary amends its Memorandum or Articles of Association in
any way which would restrict the ability of the Security
Trustee to exercise its rights under the Security Documents in
respect of the shares in such company and no Charging
Partnership will amend its partnership agreement in any way
which would restrict or impair the ability of the Security
Trustee to exercise its rights under the Pledge and Security
Agreements in respect of the partnership interests in such
partnership or otherwise as may be limited or prohibited under
the Pledge and Security Arrangements;
(l) Restricted Payments
they will procure that no member of the TCN Group makes any
Restricted Payment other than Permitted Payments;
(m) Services to Restricted Persons, TCI and US WEST
they will procure that no TCN Entity enters into any
contractual or other arrangements with a Restricted Person or
any of the Ultimate Shareholders or any of their Subsidiaries
or Associated Partnerships other than on bona fide arms length
commercial terms in the ordinary course of trading;
(n) Liabilities of Restricted Persons
they will procure that no Restricted Person has outstanding
any liabilities to any TCN Entity which, when aggregated with
the liabilities of that Restricted Person to each other TCN
Entity and of each other Restricted Person to each TCN Entity,
exceeds (pound)100,000.
In this clause 11.1(n) "LIABILITIES" of a Restricted Person to
a TCN Entity shall mean liabilities incurred after the date
hereof and shall include, without limitation, (i) any
liabilities of that TCN Entity to a third party entered into
on behalf of that Restricted
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Person and (ii) any payments made by that TCN Entity on behalf
of that Restricted Person, in either case where such
liabilities or payments have not been discharged or reimbursed
but shall exclude any liabilities of a Restricted Person to a
TCN Entity which are a Permitted Investment by that TCN Entity
in that Restricted Person; and
(o) No Carrying on Business in United States
None of the TCN Entities (i) shall employ any employees in the
State of Colorado or elsewhere in the United States and (ii)
shall carry on any business or maintain its principal places
of business, books and records and the property subject to the
Security Documents in the United States. Control and
management of each of the TCN Entities shall take place
outside the United States of America.
12. FINANCIAL COVENANTS
12.1 COVENANTS
Each TCN Entity jointly and severally undertakes with each of the Banks, the
Arrangers, the Security Trustee and the Agent:
(a) Minimum Consolidated TCN Group Net Operating Cash Flow
to ensure that from (and including) the date hereof to (but
excluding) the second consecutive Quarter Day (as shown in the
relevant Compliance Certificates) upon which Total TCN Group
Debt is equal to or less than five times Consolidated
Annualised TCN Group Net Operating Cash Flow (i) on each
Quarter Day as shown in the relevant Compliance Certificate
and (ii) on the last day of each financial year as shown in
the relevant Compliance Certificate, the amount of
Consolidated TCN Group Net Operating Cash Flow for the
preceding Six Month Period shall not be less than (1) in
respect of any Quarter Day falling during 1996, 75%, and (2)
in respect of any Quarter Day falling thereafter, 80%, in each
case of the projected Consolidated TCN Group Net Operating
Cash Flow for such Six Month Period as set out in the Agreed
Base Case.
(b) Tranche B Loan/Consolidated Annualised TCN Group Net Operating
Cash Flow
to ensure that (i) on each Quarter Day falling within the
period set out in column (1) below and (ii) on the last day of
each financial year falling within the period set out in
column (1) below the ratio of the Tranche B Loan to
Consolidated Annualised TCN Group Net Operating Cash Flow
calculated by reference to the Six Month Period ending on such
day (as shown in the relevant Compliance Certificate) shall
not exceed the number set out against such period in column
(2) below
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(1) (2)
PERIOD RATIO
from 1 July 1996 to (and including) 31 6.5
December, 1998
from 1 January 1999 to (and including) 30 6.0
June, 1999
from 1 July 1999 to (and including) 31 5.0
December, 1999
from 1 January 2000 to (and including) 31 4.0
December 2000
thereafter 3.5
(c) Facility Debt Interest Cover
to ensure that (i) on each Quarter Day falling within the
period set out in column (1) below and (ii) on the last day of
each financial year falling within the period set out in
column (1) below the ratio of Consolidated TCN Group Net
Operating Cash Flow in respect of the Six Month Period ending
on such day to Facility Debt Interest Charges for such Six
Month Period shall not be less than the number set out against
such period in column (2) below
(1) (2)
PERIOD RATIO
from 1 January 1997 to (and including) 31 1.20:1
December 1997
from 1 January 1998 to (and including) 31 1.50:1
December 1998
from 1 January 1999 to (and including) 31 2.00:1
December 1999
from 1 January 2000 to (and including) 30 2.50:1
June 2000
from 1 July 2000 to (and including) 31 3.00:1
December 2000
from 1 January 2001 onwards 4.00:1
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(d) TCN Group Debt Interest Cover
to ensure that (i) on each Quarter Day falling within the
period set out in column (1) below and (ii) on the last day of
each financial year falling within the period set out in
column (1) below the ratio of Consolidated TCN Group Net
Operating Cash Flow in respect of the Six Month Period ending
on such day to Total TCN Group Cash Paying Debt Interest
Charges during such Six Month Period shall not be less than
the number set out against such period in column (2) below
(1) (2)
PERIOD RATIO
from 1 January 1998 to (and including) 31 1.00:1
December 1998
from 1 January 1999 to (and including) 31 1.50:1
December 1999
from 1 January 2000 to (and including) 31 1.75:1
December 2001
from 1 January 2002 to (and including) 31 2.00:1
December 2002
from 1 January 2003 onwards 3.00:1
(e) TeleWest Group Debt Interest Cover
to ensure that (i) on each Quarter Day falling within the
period set out in column (1) below and (ii) on the last day of
each financial year falling within the period set out in
column (1) below the ratio of Consolidated TeleWest Group Net
Operating Cash Flow in respect of the Six Month Period ending
on such day to Total TeleWest Group Cash Paying Debt Interest
Charges during such Six Month Period shall not be less than
the number set out against such period in column (2) below
(1) (2)
PERIOD RATIO
from 1 January 1998 to (and including) 31 1.00:1
December 1998
from 1 January 1999 to (and including) 31 1.25:1
December 1999
from 1 January 2000 onwards 1.50:1
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(f) Pro-Forma Total TeleWest Group Debt Service Cover
to ensure that (i) on each Quarter Day falling after 1 January
1999 and (ii) on the last day of each financial year falling
within the period commencing 1 January 1999 the ratio of
Consolidated Annualised TeleWest Group Net Operating Cash Flow
calculated by reference to the Six Month Period ending on such
day to Proforma Total TeleWest Group Debt Service (as shown in
the relevant Compliance Certificate) shall not be less than
1.20:1.
(g) Pro-forma Total TCN Group Debt Service Cover
to ensure that (i) on each Quarter Day falling within the
period set out in column (1) below and (ii) on the last day of
each financial year falling within the period set out in
column (1) below, the ratio of Consolidated Annualised TCN
Group Net Operating Cash Flow calculated by reference to the
Six Month Period ending on such day to Proforma Total TCN
Group Debt Service (as shown in the relevant Compliance
Certificate) shall not be less than the number set out against
such period in column (2) below:
(1) (2)
PERIOD RATIO
from 1 April 2000 up to (and including) 1.20:1
31 December 2001
from 1 January 2002 to (and including) 1.25:1
31 December 2002
from 1 January 2003 onwards 1.50:1
12.2 AUDITORS CERTIFICATE
If at any time the Majority Banks do not consider (acting reasonably) that any
figure set out in any Compliance Certificate issued by any Authorised Officer is
correct, they shall be entitled within 30 days of the date of the delivery of
such Compliance Certificate to the Agent pursuant to clause 10.1 to call for a
certificate from the Borrower's auditors as to such figure. For such purposes
the Borrower's auditors shall act as independent experts and not as arbiters and
every such certificate shall be addressed to the Agent (on behalf of the Banks)
and be at the expense of the Borrower. The Majority Banks may only call for one
such certificate in any calendar year. If the Majority Banks call for such a
certificate all calculations under this Agreement by reference to the relevant
figure shall (i) until the Borrower's auditors deliver the relevant certificate
under this clause 12.2 be made by reference to the figure set out in the
relevant Compliance Certificate delivered to the Agent under this Agreement and
(ii) following the delivery by the Borrower's auditors of a certificate under
this clause 12.2 be made by reference to such certificate and the Borrower
undertakes forthwith to take all
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action, including, without limitation, the prepayment of all or part of the Loan
so as to procure that all action taken on the basis of the relevant Compliance
Certificate which on the basis of such auditors certificate would not have been
permitted is reversed.
13. EVENTS OF DEFAULT
13.1 EVENTS OF DEFAULT
Each of the following events and circumstances is an Event of Default (whether
or not caused by any reason outside the control of any TCN Entity):
(a) Non-payment
(i) any principal amount due and payable under this Agreement
is not paid on the due date or (ii) an amount of interest due
and payable under this Agreement is not paid within 3 Banking
Days of the due date or (iii) any other sum due and payable
under this Agreement is not paid within 5 Banking Days of the
due date, and, in each such case, in the manner stipulated in
this Agreement; or
(b) Breach of certain obligations
(i) any TCN Entity or TeleWest commits any breach of the
undertakings contained in clauses 10.1(a), (c)(i)(A)
and (B), (e) and (k), 11.1(a), (b), (c), (f), (g),
(h), (i), (j), (k) and (l), and 12.1; or
(ii) any TCN Entity commits any breach of the undertakings
contained in clauses 11.1(d) and (e) and, in respect
of any such breach where the principal amount of the
relevant Borrowed Money or guarantee does not exceed
(pound)1,000,000, such breach is not remedied within
five Banking Days of such breach; or
(c) Breach of other obligations
any TCN Entity or TeleWest commits any breach of or omits to
observe any of the obligations or undertakings expressed to be
assumed by them under this Agreement (other than failure to
pay any sum when due or any breach of the undertakings
referred to in (b)) above or any of the Security Documents
and, in respect of any such breach or omission which in the
opinion of the Majority Banks is capable of remedy, such
remedial action as the Majority Banks shall require is not
carried out within 28 days of the Agent notifying the Borrower
of such default and of such remedial action; or
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(d) Misrepresentation
any representation or warranty made or deemed to be made or
repeated by or in respect of any TCN Entity or TeleWest in or
pursuant to this Agreement or the Security Documents or in any
notice, certificate or statement referred to in or delivered
under this Agreement or the Security Documents is or proves to
have been incorrect or misleading in any material respect on
the date on which it was made or deemed to be made or
repeated; or
(e) Challenge to security
any Security Document is not or ceases to be effective (unless
by reason of the Banks' or the Security Trustee's failure to
file any required UCC Statements in the United States) or any
TCN Entity or TeleWest shall in any way challenge, or any
proceedings shall in any way be brought to challenge (and in
the case of a proceeding brought by someone other than any TCN
Entity or TeleWest shall continue unstayed for 30 days) the
prior status of the charges created by the Security Documents
or the validity or enforceability of the Security Documents
Provided that the creation or existence of the Permitted
Encumbrances shall not be deemed to be a challenge to the
prior status of such charges for the purposes of this clause
13.1(e); or
(f) Cross-default
(i) Borrowed Money of any member of the TCN Group or TeleWest
(which, in aggregate and including for these purposes any
Borrowed Money referred to in clause 13.1(f)(ii) below,
exceeds (pound)7,500,000) is not paid when due (or within any
applicable grace period expressly contained in the agreement
relating to such Borrowed Money in its original terms) or
becomes due or (ii) any creditor of any member of the TCN
Group, or TeleWest becomes entitled to declare any such
Borrowed Money in excess of (pound)7,500,000 (in aggregate)
due and payable prior to the date when it would otherwise have
become due; or
(g) Hedging Default
an event entitling the relevant counterparty to terminate any
arrangements in relation to interest rate hedging permitted
pursuant to clause 11.1(i) or any other interest rate or
currency swap or other hedging arrangements entered into by
any member of the TCN Group occurs and the aggregate notional
principal amounts of the swaps or other hedging arrangements
entitled to be so terminated exceeds (pound)25,000,000; or
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(h) Appointment of receivers and managers
(i) any administrative or other receiver is appointed of any
member of the TCN Group (other than an Immaterial Group
Entity), or TeleWest or any part of their respective assets
and/or undertakings or (ii) any other legal proceedings are
taken which are not irrevocably discharged or withdrawn within
28 days of the commencement thereof to enforce any Encumbrance
over all or any part of the assets of any member of the TCN
Group or TeleWest; or
(i) Insolvency
any member of the TCN Group (other than an Immaterial Group
Entity) or TeleWest is deemed unable to pay its debts within
the meaning of sections 123(1)(e) or (2) of the Insolvency Act
1986 or any member of the TCN Group, (other than an Immaterial
Group Entity) or TeleWest otherwise becomes insolvent or stops
or suspends making payments (whether of principal or interest)
with respect to all or any class of its debts or is unable or
announces an intention so to do or admits inability to pay its
debts as they fall due; or
(j) Legal process
any judgment or order made against any member of the TCN Group
(other than an Immaterial Group Entity) or TeleWest is not
stayed or complied with within 28 days or a creditor attaches
or takes possession of, or a distress, execution,
sequestration, diligence (other than on the dependence of an
action) or other process is levied or enforced upon or sued
out against, any material part of the undertaking, assets,
rights or revenues of any member of the TCN Group (other than
an Immaterial Group Entity) or TeleWest and is not discharged
within 28 days; or
(k) Compositions
any steps are taken or negotiations commenced, by any member
of the TCN Group (other than an Immaterial Group Entity) or
TeleWest or by their respective creditors with a view to
proposing any kind of composition, compromise or arrangement
involving such company and any group or class of its creditors
generally; or
(l) Winding-up
(i) any member of the TCN Group (other than an Immaterial
Group Entity) or TeleWest takes any action or any legal
proceedings are started (not being action or proceedings which
can be demonstrated to the satisfaction of the Agent by
providing an opinion of a leading firm of London solicitors to
that effect, is frivolous, vexatious or an abuse of the
process of the court or relates to a claim to which such
person has
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a good defence and which is being vigorously contested by such
body) for any member of the TCN Group (other than an
Immaterial Group Entity) or TeleWest to be adjudicated or
found bankrupt or insolvent (other than for the purpose of an
amalgamation or reconstruction previously approved in writing
by the Agent acting on the instructions of the Majority Banks)
or (ii) an order is made or resolution passed for the
winding-up of any other member of the TCN Group (other than an
Immaterial Group Entity) or TeleWest or a notice is issued
convening a meeting for the purpose of passing any such
resolution; or
(m) Administration
any petition is presented or other step is taken for the
purpose of the appointment of an administrator of any member
of the TCN Group (other than an Immaterial Group Entity) or
TeleWest or an administration order is made in relation to any
member of the TCN Group (other than an Immaterial Group
Entity) or TeleWest; or
(n) Analogous proceedings
there occurs, in relation to any member of the TCN Group
(other than an Immaterial Group Entity) or TeleWest in any
country or territory in which any of them carries on business
or to the jurisdiction of which courts any part of their
respective assets is subject, any event which, in the
reasonable opinion of the Agent, appears in that country or
territory to correspond with, or have an effect equivalent or
similar to, any of those mentioned in clauses 13.1(h) to (m)
inclusive or any member of the TCN Group or TeleWest (subject
always to equivalent grace periods and de minimis amounts as
are referred to in such clauses being exceeded) otherwise
becomes subject, in any such country or territory, to the
operation of any law relating to insolvency, bankruptcy or
liquidation; or
(o) Change of control of TeleWest
at any time prior to the second consecutive Quarter Day in
respect of which the relevant Compliance Certificates
demonstrate that each of the ratios of (A) Total TCN Group
Debt to Consolidated Annualised TCN Group Net Operating Cash
Flow and (B) Total TeleWest Group Debt to Consolidated
Annualised TeleWest Group Net Operating Cash Flow is less than
or equal to 3.0 times, either:
(i) TCI and US WEST (directly or indirectly) cease to
hold at least (1) if TCI or US WEST have at any time
disposed of any of their voting or economic interest
in TeleWest Group to any third party (not being TCI,
US WEST or any entity controlled, directly or
indirectly, by either of them or by both of them
together) 40 per cent. or (2) otherwise, 30 per cent.
of the voting and economic interest in TeleWest; or
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(ii) any person or persons acting together in concert
(other than, for these purposes, TCI, US WEST, SBC
and/or Cox and/or any entities controlled, directly
or indirectly, by any of them or by any two or more
of them together or which controls any one or more of
them) acquire either (1) a greater voting or economic
interest in TeleWest than TCI and US WEST (together,
and directly or indirectly) or (2) 40 per cent. of
the voting and economic interest in TeleWest.
For these purposes persons "acting together in concert" means
persons who pursuant to an agreement or understanding (whether
formal or informal) actively co-operate together with a view
to acquiring all or any part of the voting and economic
interest in TeleWest and those persons who are presumed to be
acting in concert for the purposes of the City Code on
Take-overs and Mergers shall also be deemed to be acting in
concert for these purposes; or
(p) Change of control of the Borrower or any Charging Subsidiary
or Charging Partnerships
(i) any Charging Subsidiary (other than an
Immaterial Group Entity and United Artists
Communications (London South) Limited)
ceases to be a wholly owned and controlled
Subsidiary of the Borrower or any Charging
Partnership ceases to have as its sole
partners members of the TCN Group; or
(ii) the Borrower ceases to be a wholly owned
Subsidiary of TeleWest; or
(q) Principal Agreements
(i) any Principal Agreement is terminated,
suspended, revoked or cancelled or otherwise
ceases to be in full force and effect unless
services of a similar nature to those
provided pursuant to such Principal
Agreement are at all times provided to the
TCN Group on similar commercial terms or on
terms no less beneficial to the relevant
member of the TCN Group save where any such
services are provided on more onerous terms
to the relevant member of the TCN Group due
to the mandatory requirements of OFTEL, the
Office of Fair Trading, the Department of
Trade and Industry, the European Commission
or any other regulatory body and any such
termination, suspension, revocation,
cancellation or cessation would have a
Material Financial Adverse Effect; or
(ii) any alteration or variation is made to any
term of any Principal Agreement which would
have a Material Financial Adverse Effect; or
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(iii) any party breaches any term of or repudiates
any of its obligations under any of the
Principal Agreements where such breach or
repudiation would have a Material Financial
Adverse Effect; or
(r) Unlawfulness
it becomes unlawful at any time for the Borrower, any TCN
Entity or TeleWest to perform any of their respective material
(in the opinion of the Majority Banks) obligations under this
Agreement or the Security Documents or any of the material (in
the opinion of the Majority Banks) obligations of any TCN
Entity or TeleWest under this Agreement and the Security
Documents becomes unenforceable in any way or there ceases to
be a first priority charge over the relevant property or
assets of the Borrower, any TCN Entity or TeleWest as intended
and created by the Security Documents save for Permitted
Encumbrances; or
(s) Environmental matters
as a result of any Environmental Law: (a) the Agent, any of
the Arrangers, the Security Trustee or any of the Banks
becomes, in the opinion of the Agent, subject to a material
obligation (actual or contingent, in the case of any
contingent obligation, being one which, at the relevant time,
would be likely to arise) in relation to any Relevant
Substance on or from any property, owned, occupied or leased
by any member of the TCN Group or TeleWest; or (b) the rights
and claims of the Agent, any of the Arrangers, the Security
Trustee, or any of the Banks under this Agreement or any of
the Security Documents become subordinated to the claims and
rights of any competent agency of the United Kingdom or the
European Community; or
(t) Telecommunications and Cable Laws
any TCN Entity fails to comply with any term or condition of
any Telecommunications and Cable Law where such non-compliance
would or is reasonably likely to have a Material Adverse
Effect, in the opinion of the Agent,; or
(u) Repudiation
any TCN Entity or TeleWest repudiates this Agreement or any
Security Document to which it is a party or does or causes or
permits to be done any act or thing evidencing an intention to
repudiate this Agreement or any such Security Document; or
(v) Seizure
all or a material part of the undertakings, assets, rights or
revenues of or shares or other ownership interests in the TCN
Group (taken as a whole) or TeleWest are
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seized, nationalised, expropriated or compulsorily acquired by
or under the authority of any government; or
(w) Material events
any other event occurs or circumstances arise which in the
opinion of the Agent acting on the instructions of the
Majority Banks is likely materially adversely to affect the
ability of the TCN Group (taken as a whole) to fulfil all or
any of its obligations under this Agreement or any Security
Document.
13.2 ACCELERATION
(A) If at any time or during any period, (i) TeleWest or any member of the
TCN Group (other than an Immaterial Group Entity) shall reside or have
a domicile, a place of business or a property in the United States (to
the extent that such residence, domicile, place of business or property
is sufficient for a person to become a "debtor" under section 109(a) of
the U.S. Federal Bankruptcy Code) and (ii) an Event of Default
specified in clauses 13.1(h) to (n) shall have occurred and be
continuing in respect of TeleWest or any such member of the TCN Group,
as applicable, in furtherance of which Event of Default an order for
relief with respect to TeleWest or such member of the TCN Group, as
applicable, shall actually be (or shall be deemed to have been) entered
under the U.S. Federal Bankruptcy Code, then the obligation of each
Bank to make its Commitment available shall be automatically terminated
and the Loan and all interest and commitment commission accrued and all
other sums payable under this Agreement immediately shall become due
and payable.
(B) At any time after the happening of any Event of Default (other than in
the circumstances set out in sub-clause (A) above), so long as the same
is continuing, the Agent may, and if so requested by the Majority Banks
shall, without prejudice to any other rights of the Banks, by notice to
the Borrower declare that:
(a) the obligation of each Bank to make its Commitment available
shall be terminated, whereupon the Commitments shall be
reduced to zero forthwith; and/or
(b) the Loan and all interest and commitment commission accrued
and all other sums payable under this Agreement have become
due and payable, whereupon the same shall, immediately, or on
demand or otherwise in accordance with the terms of such
notice, become due and payable; and/or
(c) it and/or the Security Trustee shall exercise any of the
rights granted to the Agent, the Security Trustee or the Banks
under the Security Documents.
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13.3 ON DEMAND BASIS
If, pursuant to clause 13.2(B)(b), the Agent declares the Loan to be due and
payable on demand then, at any time thereafter, the Agent may (and, if so
instructed by the Majority Banks, shall) by written notice to the Borrower: (a)
call for repayment of the Loan on such date as may be specified in such notice
whereupon the Loan shall become due and payable on the date so specified
together with all interest and commitment commission accrued and all other sums
payable under this Agreement or (b) withdraw such declaration with effect from
the date specified in such notice.
14. INDEMNITIES
14.1 MISCELLANEOUS INDEMNITIES
The Borrower shall on demand indemnify each Bank, each Arranger, the Security
Trustee and the Agent, without prejudice to any of their other rights under this
Agreement, against any loss (including in the case of (a) or (b) below loss of
Margin) or expense which such Bank, such Arranger, the Security Trustee or the
Agent shall certify as sustained or incurred by it as a consequence of:
(a) any default in payment by the Borrower of any sum under this
Agreement when due;
(b) the occurrence of any other Event of Default;
(c) any repayment or prepayment of the Loan or part thereof being
made under clause 6 or 15.1 otherwise than on the last day of
an Interest Period relating to the part of the Loan repaid or
prepaid; or
(d) any Advance not being made for any reason (excluding any
default by the Agent or any Bank) after a Drawdown Notice has
been given,
including, but not limited to, any loss or expense sustained or incurred by such
Bank in maintaining or funding its Contribution or any part thereof or in
liquidating or re-employing deposits from third parties acquired or contracted
for to fund its Contribution or any part thereof or any other amount owing to
such Bank.
14.2 CURRENCY INDEMNITY
If any sum due from the Borrower under this Agreement or any order or judgment
given or made in relation hereto has to be converted from the currency (the
"FIRST CURRENCY") in which the same is payable under this Agreement or under
such order or judgment into another currency (the "SECOND CURRENCY") for the
purpose of (a) making or filing a claim or proof against the Borrower, (b)
obtaining an order or judgment in any court or other tribunal or (c) enforcing
any order or judgment given or made in relation to this Agreement, the Borrower
agrees to indemnify and hold harmless the Agent, each Arranger, the Security
Trustee, and each Bank from and against any loss suffered as a
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result of any difference between (i) the rate of exchange used for such purpose
to convert the sum in question from the first currency into the second currency
and (ii) the rate or rates of exchange at which the Agent, such Arranger, the
Security Trustee or such Bank may in the ordinary course of business purchase
the first currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
Any amount due from the Borrower under this clause 14.2 shall be due as a
separate debt and shall not be affected by judgment being obtained for any other
sums due under or in respect of this Agreement and the term "RATE OF EXCHANGE"
includes any premium and costs of exchange payable in connection with the
purchase of the first currency with the second currency.
14.3 ENVIRONMENTAL INDEMNITY
The Borrower agrees to indemnify on demand each Bank, each Arranger, the
Security Trustee and the Agent, and their respective officers, employees, agents
and delegates (together the "INDEMNIFIED PARTIES") in respect of which each
Bank, each Arranger, the Security Trustee and the Agent holds this indemnity on
trust, without prejudice to any of their other rights under this Agreement,
against any loss, liability, action, claim, demand, cost, expense, fine or other
outgoing whatsoever whether in contract, tort, delict or otherwise and whether
arising at common law, in equity or by statute which the relevant Indemnified
Party shall certify as sustained or incurred by it at any time as a consequence
of, or relating to, or arising directly or indirectly out of, an Environmental
Claims made or asserted against such Indemnified Party which would not have
arisen if this Agreement had not been executed and which was not caused by the
negligence or wilful default of the relevant Indemnified Party.
15. UNLAWFULNESS AND INCREASED COSTS; MITIGATION
15.1 UNLAWFULNESS
If it is or becomes contrary to any law or regulation for any Bank to contribute
to Advances or to maintain its Commitment or fund or maintain its Contribution,
such Bank shall promptly, through the Agent, notify the Borrower whereupon (a)
such Bank's Commitment shall be reduced to zero and (b) the Borrower shall be
obliged to prepay the Contribution of such Bank on the earlier of (i) the date
falling 30 days after the date of receipt by the Borrower of the relevant notice
pursuant to this clause or (ii) the latest date permitted by the relevant law or
regulation. Without prejudice to the reduction of such Bank's Commitment to zero
or the obligations of the Borrower to make such repayment, the Borrower, the
Agent and such Bank shall negotiate for a period not exceeding 14 days with a
view to such Bank making available its Commitment and/or funding or maintaining
its Contribution in whole or in part in a manner which is not unlawful.
15.2 INCREASED COSTS
If the result of any change in, or in the interpretation or application of, or
the introduction of, any law or regulation, request or requirement (whether or
not having the force of law, but, if not having the force of law, with which the
relevant Bank or, as the case may be, its holding company habitually
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complies) including, without limitation, those relating to Taxation, capital
adequacy, liquidity, reserve assets, cash ratio deposits and special deposits is
to:
(a) subject any Bank to Taxes or change the basis of Taxation of
any Bank with respect to any payment under this Agreement
(other than Taxes or Taxation on the overall net income,
profits or gains of such Bank imposed in the jurisdiction in
which its principal or lending office under this Agreement is
located and other than Taxes currently payable by such Bank on
amounts received by it under this Agreement but only to the
extent so payable at the date hereof); and/or
(b) increase the cost to, or impose an additional cost on, any
Bank or its holding company in making or keeping available all
or part of such Bank's Commitment or maintaining or funding
such Bank's Contribution; and/or
(c) reduce the amount payable or the effective return to any Bank
under this Agreement; and/or
(d) reduce any Bank's or its holding company's rate of return on
its overall capital by reason of a change in the manner in
which it is required to allocate capital resources to such
Bank's obligations under this Agreement; and/or
(e) require any Bank or its holding company to make any additional
payment or forego (to a greater extent than at the date
hereof) a return calculated by reference to or on any amount
received or receivable by such Bank under this Agreement;
and/or
(f) require any Bank or its holding company to incur or sustain a
loss (including a loss of future potential profits) additional
to that incurred or sustained at the date hereof by reason of
being obliged to deduct a greater part of such Bank's
Commitment or Contribution from its capital for regulatory
purposes, than is required to be deducted at the date hereof
then and in each such case (but subject to clauses 15.3 and 15.4):
(i) such Bank shall notify the Borrower through the Agent
in writing of such event promptly upon its becoming
aware of the same; and
(ii) the Borrower agrees to pay on demand, made at any
time, whether or not such Bank's Contribution has
been repaid, to the Agent for the account of such
Bank the amount which such Bank specifies (in a
certificate setting forth the basis of the
computation of such amount but not including any
matters which such Bank or its holding company
regards as confidential) is required to compensate
such Bank and/or (if and to the extent that, such
holding company has passed the cost of the same on to
such Bank) its holding company for such
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liability to Taxes, increased or additional cost,
reduction, payment or foregone return.
15.3 EXCEPTIONS
Nothing in this clause shall entitle any Bank to compensation for any such
increased cost, reduction, payment or foregone return (a) to the extent that the
same is taken into account in calculating the Additional Cost or (b) to the
extent that the same is the subject of an additional payment under clause 8.7.
15.4 FURTHER EXCEPTION
Nothing in this clause shall entitle any Bank to compensation for any such
increased cost, reduction, payment or foregone return which arises as a
consequence of any law or regulation implementing the proposals as currently
drafted for international convergence of capital measurement and capital
standards published by the Basle Committee on Banking Regulations and
Supervisory Practices in July 1988.
15.5 MITIGATION
If, in respect of any Bank, circumstances arise which would, or would upon the
giving of notice, result in:
(a) the Borrower being required to make an increased payment to
such Bank pursuant to clause 8.7;
(b) the reduction of such Bank's Commitment to zero or the
Borrower being required to prepay such Bank's Contribution
pursuant to clause 15.1; or
(c) the Borrower being required to make a payment to such Bank to
compensate such Bank for an increased cost, reduction, payment
or foregone return pursuant to clause 15.2(ii),
then, without in any way limiting, reducing or otherwise qualifying the
obligations of the Borrower under clauses 8 and 15, such Bank shall, in
consultation with the Agent, endeavour to take such reasonable steps as may be
open to it to mitigate or remove such circumstances including (without
limitation) the transfer of its rights and obligations under this Agreement to
another bank or financial institution acceptable to the Borrower or a change of
lending office of such Bank to one acceptable to the Borrower unless, in either
case, to do so might (in the opinion of such Bank) be prejudicial to such Bank
or be in conflict with such Bank's general banking policies or involve such Bank
in expense or an increased administration burden.
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16. SET-OFF AND PRO RATA PAYMENTS
16.1 SET-OFF
The Borrower authorises each Bank to apply any credit balance to which the
Borrower is then entitled on any account of the Borrower with such Bank at any
of its branches in or towards satisfaction of any sum then due and payable from
the Borrower to such Bank under this Agreement. For this purpose each Bank is
authorised to purchase with the moneys standing to the credit of such account
such other currencies as may be necessary to effect such application. No Bank
shall be obliged to exercise any right given to it by this clause. Each Bank
shall notify the Agent and the Borrower forthwith upon the exercise or purported
exercise of any right of set-off giving full details in relation thereto and the
Agent shall inform the other Banks.
16.2 PRO RATA PAYMENTS
(a) If at any time any Bank (the "RECOVERING BANK") receives or
recovers any amount owing to it by the Borrower under this
Agreement by direct payment, set-off or in any manner (but
excluding any recoveries by virtue of any cash management or
interest netting arrangements operated by any Bank in its
capacity as a provider of day to day banking services to the
TCN Group to the extent that such arrangements are permitted
by this Agreement) other than by payment through the Agent
pursuant to clause 8.1 or 8.11 (not being a payment received
from an Assignee, a Substitute or a Sub-Participant), the
Recovering Bank shall, within two Banking Days of such receipt
or recovery (a "RELEVANT RECEIPT") notify the Agent of the
amount of the Relevant Receipt. If the Relevant Receipt
exceeds the amount which the Recovering Bank would have
received if the Relevant Receipt had been received by the
Agent and distributed pursuant to clause 8.1 or 8.11 (as the
case may be) then:
(i) within two Banking Days of demand by the
Agent, the Recovering Bank shall pay to the
Agent an amount equal to the excess;
(ii) the Agent shall treat the excess amount so
paid by the Recovering Bank as if it were a
payment made by the Borrower and shall
distribute the same to the Banks (other than
the Recovering Bank) in accordance with
clause 8.11, and
(iii) as between the Borrower and the Recovering
Bank the excess amount so re-distributed
shall be treated as not having been paid but
the obligations of the Borrower to the other
Banks shall, to the extent of the amounts so
re-distributed to them, be treated as
discharged.
(b) If any part of the Relevant Receipt subsequently has to be
wholly or partly refunded by the Recovering Bank (whether to a
liquidator or otherwise) each Bank to which
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any part of such Relevant Receipt was so re-distributed shall
on request from the Recovering Bank repay to the Recovering
Bank such Bank's pro rata share of the amount which has to be
refunded by the Recovering Bank.
(c) Each Bank shall on request supply to the Agent such
information as the Agent may from time to time request for the
purpose of this clause 16.2.
(d) Notwithstanding the foregoing provisions of this clause 16.2
no Recovering Bank shall be obliged to share any Relevant
Receipt which it receives or recovers pursuant to legal
proceedings taken by it to recover any sums owing to it under
this Agreement with any other party which has a legal right
to, but does not, either join in such proceedings or commence
and diligently pursue separate proceedings to enforce its
rights in the same or another court (unless the proceedings
instituted by the Recovering Bank are instituted by it without
prior notice having been given to such party through the
Agent).
16.3 NO RELEASE
For the avoidance of doubt it is hereby declared that failure by any Recovering
Bank to comply with the provisions of clause 16.2 shall not release any other
Recovering Bank from any of its obligations or liabilities under clause 16.2.
16.4 NO CHARGE
The provisions of this clause 16 shall not, and shall not be construed so as to,
constitute a charge by a Bank over all or any part of a sum received or
recovered by it in the circumstances mentioned in clause 16.2.
17. ASSIGNMENT, SUBSTITUTION AND LENDING OFFICES
17.1 BENEFIT AND BURDEN
This Agreement shall be binding upon, and enure for the benefit of, the Banks,
the Arrangers, the Agent, the Security Trustee, the TCN Entities and their
respective successors.
17.2 NO ASSIGNMENT BY BORROWER
None of the TCN Entities may assign or transfer any of its rights or obligations
under this Agreement.
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17.3 ASSIGNMENT BY BANKS
Each Bank (an "ASSIGNOR BANK") may assign all or any part of its rights in
respect of its Contribution to any Qualifying Bank (an "ASSIGNEE") with the
prior written consent of the Borrower (which shall not be unreasonably withheld
or delayed) provided that no such consent is necessary if such Assignee is a
wholly owned Subsidiary of such Assignor Bank or a person of whom such Assignor
Bank is a wholly owned Subsidiary. No Bank may assign all or any part of its
rights in respect of its Contribution to any person which is not a Qualifying
Bank.
17.4 SUBSTITUTION
Each Bank (a "TRANSFEROR BANK") may transfer, by way of novation, all or any
part of its rights, benefits and/or obligations under this Agreement and the
Security Trust Deed to any Qualifying Bank (a "SUBSTITUTE") with the prior
written consent of the Borrower (which shall not be unreasonably withheld or
delayed) provided that no such consent is necessary if such Substitute is a
wholly-owned Subsidiary (being a Qualifying Bank) of such Transferor Bank or a
person (being a Qualifying Bank) of whom such Transferor Bank is a wholly-owned
Subsidiary if any such transfer would not give rise to any obligation to make
any payment on the part of the Borrower which it would not have had to make at
such time but for such transfer. Any such novation shall be effected upon five
Banking Days' prior notice by delivery to the Agent of a duly completed
Substitution Certificate duly executed by such Bank, the Substitute and the
Agent (for itself, the Arrangers, the Security Trustee, the Borrower, the
Charging Subsidiaries and the other Banks). On the effective date specified in a
Substitution Certificate so executed and delivered, to the extent that they are
expressed in such Substitution Certificate to be the subject of the novation
effected pursuant to this clause 17.4:
(a) the existing parties to this Agreement and the Bank party to
the relevant Substitution Certificate shall be released from
their respective obligations towards one another under this
Agreement and the Security Trust Deed ("DISCHARGED
OBLIGATIONS") and their respective rights against one another
under this Agreement ("DISCHARGED RIGHTS") shall be cancelled;
(b) the Substitute party to the relevant Substitution Certificate
and the existing parties to this Agreement and the Security
Trust Deed (other than the Bank party to such Substitution
Certificate) shall assume obligations towards each other which
differ from the discharged obligations only insofar as they
are owed to or assumed by such Substitute instead of to or by
such Bank;
(c) the Substitute party to the relevant Substitution Certificate
and the existing parties to this Agreement and the Security
Trust Deed (other than the Bank party to such Substitution
Certificate) shall acquire rights against each other which
differ from the discharged rights only insofar as they are
exercisable by or against such Substitute instead of by or
against such Bank
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and, on the date upon which such novation takes effect (where such novation
takes place after 19 July 1996) the Substitute shall pay to the Agent for its
own account a fee of (pound)500. The Agent shall promptly notify the Borrower of
the receipt by it of any Substitution Certificate and deliver a copy thereof to
the Borrower.
17.5 RELIANCE ON SUBSTITUTION CERTIFICATE
The Agent, the Banks, the Arrangers, the Security Trustee and each TCN Entity
shall be fully entitled to rely on any Substitution Certificate delivered to the
Agent in accordance with the foregoing provisions of this clause 17 which is
complete and regular on its face as regards its contents and purportedly signed
on behalf of the relevant Bank and the Substitute and none of the Agent, the
Banks, the Arrangers, the Security Trustee or each TCN Entity shall have any
liability or responsibility to any party as a consequence of placing reliance on
and acting in accordance with any such Substitute Certificate if it proves to be
the case that the same was not authentic or duly authorised.
17.6 AUTHORISATION OF AGENT
Each TCN Entity, each Arranger, the Security Trustee and each Bank irrevocably
authorises the Agent to counter-sign each Substitution Certificate on its behalf
without any further consent of, or consultation with such TCN Entity, such
Arranger, the Security Trustee or such Bank except, in the case of the Borrower,
the consent required pursuant to clause 17.3 or 17.4.
17.7 CONSTRUCTION OF CERTAIN REFERENCES
If any Bank assigns all or any part of its rights or novates all or any part of
its rights, benefits and obligations as provided in clause 17.3 or 17.4 all
relevant references in this Agreement to such Bank shall thereafter be construed
as a reference to such Bank and/or its Assignee or Substitute (as the case may
be) to the extent of their respective interests.
17.8 LENDING OFFICES
Each Bank shall lend through its office at the address specified in Schedule 1
or, as the case may be, in any relevant Substitution Certificate or through any
other office located in the United Kingdom of such Bank selected from time to
time by such Bank through which such Bank wishes to lend for the purposes of
this Agreement. If the office through which a Bank is lending is changed
pursuant to this clause 17.8, such Bank shall notify the Agent promptly of such
change.
17.9 DISCLOSURE OF INFORMATION
Save as permitted pursuant to the terms of this Agreement or the relevant
Security Document any information furnished pursuant to this Agreement or any
Security Document to which the Borrower or any other TCN Entity (as the case may
be) is a party to the Agent, the Arranger, the Security Trustee
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or the Banks shall be kept confidential by the recipient and the Agent, the
Arrangers, the Security Trustee and the Banks, save that the provisions of this
clause 17.9 shall not apply:
(a) to any information already known to the recipient;
(b) to any information subsequently received by the recipient
which it would otherwise be free to disclose;
(c) to any information which is or becomes public knowledge
otherwise than as a result of a breach by any person of this
clause 17.9 or of any confidentiality undertaking entered into
pursuant to clause 17.11; and
(d) to any extent that the recipient is required to disclose the
same pursuant to any law or order of any court or order or
request of any governmental agency with whose instructions the
recipient habitually complies.
17.10 SUB-PARTICIPATION
No Bank may enter into any sub-participation arrangements in relation to all or
any part of its rights and obligations under this Agreement with any person
without the consent of the Borrower and the Agent.
17.11 CONFIDENTIALITY UNDERTAKING
Any Bank, the Security Trustee, any Arranger or the Agent may, having obtained
the prior consent of the Borrower (such consent not to be unreasonably withheld)
disclose to a prospective Assignee or Substitute or to any other person who may
propose entering into contractual relations with such Bank, the Security
Trustee, any Arranger or the Agent in relation to this Agreement or any Security
Document any information referred to in clause 17.9 subject to the prospective
Assignee or Substitute or other person first entering into a confidentiality
undertaking with the Borrower and the other TCN Entities in substantially the
same terms as clause 17.9 and this clause 17.11.
18. ARRANGERS, AGENT AND REFERENCE BANKS
18.1 APPOINTMENT OF AGENT
Each Bank irrevocably appoints the Agent as its agent for the purposes of this
Agreement and any relevant Security Document and authorises the Agent (whether
or not by or through employees or agents) to take such action on such Bank's
behalf and to exercise such rights, remedies, powers and discretions as are
specifically delegated to the Agent by this Agreement and/or any relevant
Security Document, together with such powers and discretions as are reasonably
incidental thereto. None of the Agent, the Arrangers or the Security Trustee
shall, however, have any duties, obligations or
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liabilities to the Banks beyond those expressly stated in this Agreement and/or
the Security Documents.
18.2 AMENDMENTS TO THIS AGREEMENT
(a) Subject to clause 18.2(b) and save where otherwise provided in
this Agreement, the Agent may, with the consent of the
Majority Banks (or if and to the extent expressly authorised
by the other provision of this Agreement), amend, modify or
otherwise vary or waive breaches of, or defaults under, or
otherwise excuse performance of, any provision of this
Agreement or any other Security Document entered into in
favour of the Agent. Any such action so authorised and
effected by the Agent shall be promptly notified to the Banks
by the Agent and shall be binding on all of the Banks.
(b) Except with the prior written consent of all of the Banks, the
Agent shall not have authority on behalf of the Banks (A) to
agree with any TCN Entity any amendment to this Agreement or
to grant waivers in respect of breaches of or defaults under
this Agreement or to excuse performance of this Agreement
which would (i) reduce the Margin, (ii) extend the due date or
reduce the amount of any payment of principal, interest or
other amount payable under this Agreement, (iii) change the
currency in which any amount is payable under this Agreement,
(iv) increase any Bank's Commitment, (v) change the definition
of "Majority Banks" in clause 1.2, change clauses 3.3, 4.2,
4.3, 4.4, 15.2, 16.2 or 17.2, (vi) change this clause 18.2,
(B) to release any asset of whatever nature that is subject to
a Security Document unless such release is to permit the
disposal or other dealing with such asset in accordance with
the terms of this Agreement or the relevant Security Document
or (C) to release any TCN Entity (other than an Immaterial
Group Entity) from all of its obligations under this Agreement
and the Security Documents.
18.3 RIGHTS OF AGENT, SECURITY TRUSTEE AND EACH ARRANGER AS BANK; NO
PARTNERSHIP
With respect to its own Commitment and Contribution (if any) the Agent, the
Security Trustee and each Arranger shall have the same rights and powers under
this Agreement as any other Bank and may exercise the same as though it were not
performing the duties and functions delegated to it under this Agreement and/or
the Security Documents and the term "Banks" shall, unless the context clearly
otherwise indicates, include the Agent, the Security Trustee, each Arranger in
its individual capacity as a Bank. This Agreement shall not and shall not be
construed so as to constitute a partnership between the parties or any of them.
18.4 NO LIABILITY OF THE ARRANGERS, THE SECURITY TRUSTEE AND AGENT
None of the Arrangers, the Security Trustee or the Agent shall:
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(a) be obliged to request any certificate or opinion under clause
10 or 12 or to make any enquiry as to the use of the proceeds
of the Loan unless (in the case of the Agent) so required in
writing by any Bank, in which case the Agent shall promptly
make the appropriate request of the Borrower, or be obliged to
make any enquiry as to any default by the Borrower in the
performance or observance of any of the provisions of this
Agreement or as to the existence of a Default unless (in the
case of the Agent) the Agent has actual knowledge thereof or
has been notified in writing thereof by a Bank, in which case
the Agent shall promptly notify the Banks of the relevant
event or circumstance; or
(b) be liable to any Bank for any action taken or omitted under or
in connection with this Agreement or the Loan unless caused by
their or its gross negligence or wilful misconduct.
For the purpose of this clause 18 neither the Agent nor the Security Trustee
shall be treated as having actual knowledge of any matter of which the corporate
finance or any other division outside the corporate lending or loan
administration departments of the person for the time being acting as the Agent
or the Security Trustee, as the case may be, may become aware in the context of
corporate finance or advisory activities from time to time undertaken by the
Agent or the Security Trustee, as the case may be, for any TCN Entity, TeleWest,
any Affiliate, any Ultimate Shareholder or any of their respective Subsidiaries,
Associated Partnerships or Affiliates.
18.5 AGENT'S DUTY TO NOTIFY AND TAKE ACTION
The Agent shall:
(a) promptly notify each Bank of the contents of each notice,
certificate or other document received by the Agent from the
Borrower under or pursuant to clause 11 and provide each Bank
with a copy of each set of financial statements, Monthly
Management Accounts or Quarterly Management Accounts delivered
to the Agent under clause 10.1(f), (g) or (h); and
(b) (subject to its being indemnified to its satisfaction) take
such action or, as the case may be, refrain from taking such
action with respect to any Default of which the Agent has
actual knowledge as the Majority Banks or Banks (as the case
may be) may reasonably direct.
18.6 IDENTITY OF THE BANKS
The Agent may deem and treat (a) each Bank as the person entitled to the benefit
of the Contribution of such Bank for all purposes of this Agreement unless and
until a notice of assignment of such Bank's Contribution or any part thereof or
a Substitution Certificate shall have been filed with the Agent, and (b) the
office set opposite the name of each Bank in Part D of Schedule 1 or, as the
case
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may be, in any relevant Substitution Certificate as such Bank's lending office
unless and until a written notice of change of lending office shall have been
received by the Agent; and the Agent may act upon any such notice unless and
until the same is superseded by a further such notice.
18.7 NON-RELIANCE ON THE ARRANGERS, THE SECURITY TRUSTEE OR THE AGENT
Each Bank acknowledges that it has not relied on any statement, opinion,
forecast or other representation made by the Arrangers, the Security Trustee or
the Agent to induce it to enter into this Agreement an that it has made and will
continue to make, without reliance on the Agent, the Arrangers or the Security
Trustee and based on such documents as it considers appropriate, its own
appraisal of the creditworthiness of each TCN Entity and TeleWest and its own
independent investigation of the financial condition and affairs of each TCN
Entity and TeleWest in connection with the making and continuation of the Loan
under this Agreement. None of the Arrangers, the Security Trustee or the Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to provide any Bank with any credit or other information with respect to
any TCN Entity or TeleWest, whether coming into their or its possession before
the making of any Advance or at any time or times thereafter, other than (in the
case of the Agent) as provided in clause 18.5(a).
18.8 NO RESPONSIBILITY ON ARRANGERS, SECURITY TRUSTEE OR AGENT FOR
BORROWER'S, ETC. PERFORMANCE
None of the Arrangers, the Security Trustee or the Agent shall have any
responsibility to any Bank on account of the failure of any TCN Entity or
TeleWest, to perform their respective obligations under this Agreement or the
Security Documents or for the financial condition of any TCN Entity or Telewest,
or for the completeness or accuracy of any statements, representations or
warranties in this Agreement, the Security Documents or any document delivered
under this Agreement, the Security Documents or for the execution,
effectiveness, adequacy, genuineness, validity, enforceability or admissibility
in evidence of this Agreement or the Security Documents or of any certificate,
report or other document executed or delivered under this Agreement or the
Security Documents or otherwise in connection with the Loan or its negotiation
or for acting (or, as the case may be, refraining from acting) in accordance
with the instructions of the Majority Banks or all of the Banks (as the case may
be). The Arrangers, the Security Trustee and the Agent shall be entitled to rely
on any communication, instrument or document believed by them or it to be
genuine and correct and to have been signed or sent by the proper person and
shall be entitled to rely as to legal or other professional matters on opinions
and statements of any legal or other professional advisers selected or approved
by them or it.
18.9 OTHER DEALINGS
The Arrangers, the Security Trustee and the Agent may, without any liability to
account to the Banks, accept deposits from, lend money to, and generally engage
in any kind of banking or trust business with, each TCN Entity, Telewest or any
of their respective Subsidiaries, Associated Partnerships or Affiliates or any
of the Banks as if they or it were not an Arranger, the Security Trustee or the
Agent (as the case may be).
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18.10 REIMBURSEMENT AND INDEMNITY BY BANKS
Each Bank shall reimburse the Arrangers, the Security Trustee and the Agent
(rateably in accordance with such Bank's Commitment, at any time before the
making of the first Advance or if no Advance is then outstanding, or
Contribution, at any other time) to the extent that such Arranger, the Security
Trustee or the Agent is not reimbursed by the Borrower, for the charges and
expenses incurred by such Arranger, the Security Trustee and the Agent in
connection with the negotiation, preparation, syndication and execution of this
Agreement and/or in contemplation of, or otherwise in connection with, the
enforcement of, or the preservation of any rights under, or in carrying out its
duties under, this Agreement and/or the Security Documents including (in each
case) the fees and expenses of legal or other professional advisers. Each Bank
shall indemnify the Agent and the Security Trustee (rateably in accordance with
such Bank's Commitment, at any time before the making of the first Advance or if
no Advance is then outstanding, or Contribution, at any other time) against all
liabilities, damages, costs and claims whatsoever incurred by the Agent or the
Security Trustee (as the case may be) in connection with this Agreement and/or
the Security Documents or any document or report referred to in this Agreement
or the performance of its duties under this Agreement and/or the Security
Documents or any action taken or omitted by the Agent or the Security Trustee
(as the case may be) under this Agreement and/or the Security Documents, unless
such liabilities, damages, costs or claims arise from the Agent's or the
Security Trustee's (as the case may be) own gross negligence or wilful
misconduct.
18.11 RETIREMENT OF AGENT
(a) The Agent may retire from its appointment as Agent under this
Agreement and/or the relevant Security Documents having given
to the Borrower and each of the Banks not less than 30 days'
notice of its intention to do so, provided that no such
retirement shall take effect unless there has been appointed
by the Banks (after consultation with the Borrower) as a
successor agent:
(i) a Bank; or
(ii) any other reputable and experienced
financial institution with offices in London
nominated and accepted by the Majority Banks
and to which the Borrower has given its
consent (such consent not to be unreasonably
withheld or delayed); or, failing such
nomination;
(iii) any reputable and experienced bank or
financial institution with offices in London
nominated by the Agent and to which the
Borrower has given its consent (such consent
not to be unreasonably withheld or delayed).
(b) All of the Banks (other than the Agent, in its capacity as a
Bank) may, having given to the Agent not less than 30 days'
notice of the intention to do so, remove the Agent
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from its appointment as such under the Agreement. The removal
shall automatically be of effect on the expiry of the notice
save, where the Banks (other than the Agent, in its capacity
as a Bank) shall have failed to appoint a successor agent
falling within the requirements of clause 18.11(a) (i) or
(ii), in which case the removal shall be deferred until such
appointment is made. The Banks (other than the Agent, in its
capacity as a Bank) shall immediately notify the Agent in
writing of their making such appointment.
(c) Upon any such successor as aforesaid being appointed, the
retiring Agent shall be discharged from any further obligation
under this Agreement and/or the relevant Security Documents
and its successor and each of the other parties to this
Agreement and/or the relevant Security Documents shall have
the same rights and obligations among themselves as they would
have had if such successor had been a party to this Agreement
and/or the relevant Security Documents in place of the
retiring Agent.
18.12 CHANGE OF REFERENCE BANKS
If (a) the whole of the Contribution (if any) of any Reference Bank is prepaid,
(b) the Commitment (if any) of any Reference Bank is reduced to zero in
accordance with clause 6.4 or 15.1, (c) a Reference Bank assigns and/or novates
the whole of its rights and obligations (if any) as a Bank under this Agreement
or (d) any Reference Bank ceases to provide quotations to the Agent for the
purposes of determining LIBOR, the Agent may, acting on the instructions of the
Majority Banks, terminate the appointment of such Reference Bank and after
consultation with the Borrower appoint another Bank to replace such Reference
Bank.
18.13 SECURITY DOCUMENTS
Each Bank acknowledges and agrees to the terms and conditions of the Security
Documents and the Security Trustee and the Banks agree that the Banks will,
subject to the terms of the Security Trust Deed, be entitled to all the rights
and subject to the liabilities and obligations of the Banks (and, if applicable,
the Bond Providers and/or Interest Rate Beneficiaries (as defined therein))
under the Debenture and any other Security Document entered into by the Security
Trustee for the benefit of the Banks and, if applicable, the Bond Providers
and/or Interest Rate Beneficiaries.
19. NOTICES AND OTHER MATTERS
19.1 NOTICES
Every notice, request, demand or other communication under this Agreement shall,
if addressed to the Borrower, be copied to TeleWest and, if addressed to any
other TCN Entity, be copied to the Borrower and TeleWest, and shall:
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(a) be in writing delivered personally or by first-class prepaid
letter (airmail if applicable and available), telex or telefax
(confirmed in the case of a telefax, by first-class prepaid
letter (airmail if available)):
(b) be deemed to have been received, subject as otherwise provided
in this Agreement, in the case of a letter, when delivered
personally or 3 days (7 days in the case of a letter posted
from one country to another) after it has been put into the
post and, in the case of a telex or telefax, at the time of
despatch with, in the case of telex, confirmed answerback of
the addressee appearing at the beginning and end of the
transmission or it the case of a telefax, with confirmation by
the sender's facsimile machine that the message has been
received at the correct facsimile number (provided that if the
date of delivery or despatch is not a business day in the
country of the addressee or if the time of despatch of any
telex or telefax is after the close of business in the country
of the addressee it shall be deemed to have been received at
the opening of business on the next such business day); and
(c) be sent:
(i) to the Borrower and each other TCN Entity at:
c/o TeleWest Communications plc
Genesis Business Park
Albert Drive
Woking
Surrey GU21 5RW
Telefax: 01483 750901
Attention: Vice-President - Treasury
(ii) to the Agent and the Security Trustee at:
Cottons Centre
Cottons Lane
London SE1 2QL
Telex: 888229 - CIBC G
Telefax: 0171 234 6433
Attention: Supervisor, Banking Services
(iii) to each Arranger and each Bank at its
address, telex number or telefax number
specified in Part D of Schedule 1 or in any
relevant Substitution Certificate
95
<PAGE>
or to such other address, telex number or telefax number as is
notified by the Borrower, a TCN Entity, the Agent, an
Arranger, the Security Trustee or a Bank (as the case may be)
to the other parties to this Agreement.
19.2 NOTICES THROUGH THE AGENT
Every notice, request, demand or other communication under this Agreement to be
given by any TCN Entity to any other party shall be given to the Agent for
onward transmission as appropriate and to be given to any TCN Entity shall
(except as otherwise provided in this Agreement) be given by the Agent.
19.3 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of the Agent, the Arrangers, the Security
Trustee, the Banks or any of them to exercise any power, right or remedy under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise by the Agent, the Arrangers, the Security Trustee, the Banks or
any of them of any power, right or remedy preclude any other or further exercise
thereof or the exercise of any other power, right or remedy. The remedies
provided in this Agreement are cumulative and are not exclusive of any remedies
provided by law.
20. LEASE FINANCING AND PARI PASSU BORROWINGS
20.1 LEASE FINANCING
Each Bank, the Security Trustee, the Arrangers and the Agent acknowledges that
the Borrower or a TCN Entity may wish to enter into Finance Leases from time to
time. Accordingly the parties hereto agree that they will negotiate in good
faith should the relevant TCN Entity wish to use the facility granted pursuant
to this Agreement by way of guarantees or letters of credit in favour of the
lessors in respect of such Finance Leases in order to agree arrangements
satisfactory to all parties. If, no later than 30 June, 1997, any Finance Lease
is entered into by a TCN Entity which is supported by guarantees or letters of
credit given under the facility granted pursuant to this Agreement (and the
mandate therefor has been awarded to the prospective lessor no later than 31
January, 1997) which does not, in the opinion of each Bank (acting reasonably),
require such Bank to assume any greater credit or other risk or any onerous
obligations, then any such arrangements shall not involve the payment of a fee
to any of the Banks, the Arrangers, the Agent or the Security Trustee and each
Bank, the Security Trustee, each of the Arrangers and the Agent undertakes to
act reasonably to agree any relevant documentation.
20.2 PARI PASSU BORROWINGS
Each Bank, the Security Trustee, the Arrangers and the Agent agrees that any
lender of any Borrowed Money within paragraph (ix) of Permitted Borrowings shall
be entitled to share in the security constituted by the Security Documents on a
pari passu basis with the Banks and agrees to enter into
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such supplemental documentation (at the cost of the Borrower) as may reasonably
be required in order to effect the same.
21. GOVERNING LAW AND JURISDICTION
21.1 LAW
This Agreement is governed by and shall be construed in accordance with English
law.
21.2 SUBMISSION TO JURISDICTION
Each TCN Entity agrees for the benefit of the Agent, the Arrangers, the Security
Trustee and the Banks that any legal action or proceedings in connection with
this Agreement against any TCN Entity or any of their respective assets may be
brought in the English courts. Each TCN Entity irrevocably and unconditionally
submit to the jurisdiction of such courts and in the case of TCN Entities which
are not incorporated or organised under the laws of England, irrevocably
designate, appoint and empower Legibus Secretaries Limited at present of 200
Aldersgate Street, London EC1A 4JJ to receive for them and on their behalf,
service of process issued out of the English courts in any legal action or
proceedings arising out of or in connection with this Agreement. The submission
to such jurisdiction shall not (and shall not be construed so as to) limit the
right of the Agent, the Arrangers, the Security Trustee or the Banks to take
proceedings against any TCN Entity to enforce any judgment obtained in any court
referred to in this clause 21.2 in any jurisdiction in which any of the assets
of any TCN Entity are situated, nor shall the taking of proceedings in any one
or more jurisdiction referred to in this clause 21.2 preclude the taking of
proceedings in any other such jurisdiction, whether concurrently or not.
21.3 INCONVENIENT FORUM
Each TCN Entity irrevocably waives any objection they may have now or hereafter
to the laying of venue of any action or proceeding in any court or jurisdiction
referred to in clause 21.2 and any claim they may have now or hereafter that any
action or proceeding brought in such courts or jurisdiction has been brought in
an inconvenient forum.
IN WITNESS whereof the parties to this Agreement have caused this Agreement to
be duly executed on the date first above written.
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<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
PART A
THE ORIGINAL CHARGING SUBSIDIARIES
=========================================================================================================
(1) (2)
COMPANY NAME COMPANY NUMBER
- ---------------------------------------------------------------------------------------------------------
<S> <C>
TeleWest Communications Group Limited 2514287
- ---------------------------------------------------------------------------------------------------------
TeleWest Communications Cable Limited 2883742
- ---------------------------------------------------------------------------------------------------------
TeleWest Holdings Limited 2982404
- ---------------------------------------------------------------------------------------------------------
TeleWest Parliamentary Holdings Limited 2514316
- ---------------------------------------------------------------------------------------------------------
Theseus No 1 Limited 2994027
- ---------------------------------------------------------------------------------------------------------
Theseus No. 2 Limited 2994061
- ---------------------------------------------------------------------------------------------------------
The Cable Equipment Store Limited 2693805
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (Cotswolds) Limited 1743081
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (Nominees) Limited 2318746
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (North East) Limited 2378214
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (South East) Limited 2270764
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (South Thames Estuary) 2270763
Limited
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (Tyneside) Limited 2407676
- ---------------------------------------------------------------------------------------------------------
SBC CableComms (UK) Limited 2795350
- ---------------------------------------------------------------------------------------------------------
Southwestern Bell International Holdings Limited 2378768
- ---------------------------------------------------------------------------------------------------------
Midlands Cable Communications Limited 1882074
- ---------------------------------------------------------------------------------------------------------
Telford Telecommunications Limited 2389377
- ---------------------------------------------------------------------------------------------------------
North West Cable Communications Limited 2321124
- ---------------------------------------------------------------------------------------------------------
Cable Communications Wigan Limited 2451112
- ---------------------------------------------------------------------------------------------------------
Cable Communications (Central Lancashire) Limited 1737862
- ---------------------------------------------------------------------------------------------------------
Cable Communications Liverpool Limited 1615567
=========================================================================================================
98
<PAGE>
<CAPTION>
=========================================================================================================
(1) (2)
COMPANY NAME COMPANY NUMBER
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Cable Communications (St. Helens & Knowsley) 2466599
Limited
- ---------------------------------------------------------------------------------------------------------
TeleWest (Motherwell) Limited SC150057
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (London South) Limited 1697437
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (Avon) Limited 2271287
- ---------------------------------------------------------------------------------------------------------
Tayside Cable Systems Limited SC096816
- ---------------------------------------------------------------------------------------------------------
Kingdom Cablevision Limited SC119523
- ---------------------------------------------------------------------------------------------------------
Scotcable (Motherwell) Limited SC121617
- ---------------------------------------------------------------------------------------------------------
Scotcable (Cumbernauld) Limited SC121614
- ---------------------------------------------------------------------------------------------------------
Scotcable (Dumbarton) Limited SC121700
- ---------------------------------------------------------------------------------------------------------
Cable North (Forth District) SC122481
Limited
- ---------------------------------------------------------------------------------------------------------
United Artists Communications (Scotland) Limited SC80891
- ---------------------------------------------------------------------------------------------------------
TeleWest Scotland Holdings Limited SC150058
- ---------------------------------------------------------------------------------------------------------
TeleWest Communications (Internet) Limited 03141035
- ---------------------------------------------------------------------------------------------------------
TeleWest Southport Limited 03085912
- ---------------------------------------------------------------------------------------------------------
Crystal Palace Radio Limited 01459745
- ---------------------------------------------------------------------------------------------------------
Avon Cable Investments Limited 2487110
- ---------------------------------------------------------------------------------------------------------
TeleWest (Worcester) Limited 02475098
=========================================================================================================
</TABLE>
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<PAGE>
PART B
<TABLE>
<CAPTION>
THE ORIGINAL CHARGING PARTNERSHIPS
=====================================================================================================
(1) (2)
PARTNERSHIP NAME PRINCIPAL PLACE OF BUSINESS
- -----------------------------------------------------------------------------------------------------
<S> <C>
Cotswolds Cable Limited Partnership Concord House,
Staverton Technology Park,
Staverton,
Cheltenham,
Gloucestershire GL51 6TQ
- -----------------------------------------------------------------------------------------------------
Estuaries Cable Limited Partnership Communications House, Scimitar Park,
Courtauld Park,
Basildon,
Essex SS1 1ND
- -----------------------------------------------------------------------------------------------------
TCI/US WEST Cable Communications Group Genesis Business Park,
Albert Drive,
Woking,
Surrey GU21 5RW
- -----------------------------------------------------------------------------------------------------
Tyneside Cable Limited Partnership Communications House,
1 Duke's Way West,
Team Valley,
Gateshead,
County Durham NE11 6EG
- -----------------------------------------------------------------------------------------------------
United Artists Communications (North East) Communications House,
Partnership 1 Duke's Way West,
Team Valley,
Gateshead,
County Durham NE11 6EG
- -----------------------------------------------------------------------------------------------------
United Artists Communications (South East) Communications House, Scimitar Park,
Partnership Courtauld Park, Basildon,
Essex SS1 1ND
- -----------------------------------------------------------------------------------------------------
London South Cable Partnership Communications Centre, 5 Factory Lane,
Croydon, Surrey
- -----------------------------------------------------------------------------------------------------
Avon Cable Limited Partnership 700 Waterside Drive, Aztec West,
Almondsbury, Bristol BS12 4ST
=====================================================================================================
100
<PAGE>
<CAPTION>
=====================================================================================================
(1) (2)
PARTNERSHIP NAME PRINCIPAL PLACE OF BUSINESS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Edinburgh Cable Limited Partnership 1 South Gyle Crescent Lane, Edinburgh, EH2
9EG
- -----------------------------------------------------------------------------------------------------
United Cable (London South) Limited Communications Centre,
Partnership 5 Factory Lane, Croydon, Surrey
- -----------------------------------------------------------------------------------------------------
Avon Cable Joint Venture 700 Waterside Drive, Aztec West,
Almondsbury, Bristol BS12 4ST
- -----------------------------------------------------------------------------------------------------
London South Joint Venture Communications Centre,
5 Factory Lane, Croydon, Surrey
- -----------------------------------------------------------------------------------------------------
United Artists Communications (Cotswolds) Network Centre,
Venture Staverton Technology Park, Staverton,
Cheltenham, Gloucestershire GL51 6TQ
- -----------------------------------------------------------------------------------------------------
United Artists Communications (Scotland) 1 South Gyle Crescent Lane, Edinburgh, EH2
Venture 9EG
=====================================================================================================
</TABLE>
101
<PAGE>
PART C
<TABLE>
<CAPTION>
THE ORIGINAL NON-CHARGING SUBSIDIARIES
==================================================================================================================
(1) (2)
COMPANY NAME COMPANY NUMBER
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Cable Communications Telecomm Limited 02423585
- ------------------------------------------------------------------------------------------------------------------
Cable Communications Limited 01860121
- ------------------------------------------------------------------------------------------------------------------
Cable Communications (Fylde & Wyre) Limited 02935056
- ------------------------------------------------------------------------------------------------------------------
TeleWest Share Trust Limited 02472760
- ------------------------------------------------------------------------------------------------------------------
TeleWest Trustees Limited 03071066
- ------------------------------------------------------------------------------------------------------------------
Crystalvision Productions Limited 01947225
- ------------------------------------------------------------------------------------------------------------------
Capital City Cablevision Limited SC80665
- ------------------------------------------------------------------------------------------------------------------
Edinburgh Cablevision Limited SC078895
- ------------------------------------------------------------------------------------------------------------------
Hieronymous Limited SC80135
- ------------------------------------------------------------------------------------------------------------------
Cable Communications South East Staffordshire Limited 03006851
- ------------------------------------------------------------------------------------------------------------------
Cable Communications Shrewsbury Limited 03039816
- ------------------------------------------------------------------------------------------------------------------
Perth Cable Television Limited SC032627
- ------------------------------------------------------------------------------------------------------------------
Dundee Cable and Satellite Limited SC093114
- ------------------------------------------------------------------------------------------------------------------
Cable Guide Limited 02025654
==================================================================================================================
</TABLE>
102
<PAGE>
PART D
<TABLE>
<CAPTION>
THE BANKS AND THEIR COMMITMENTS
NAME ADDRESS AND TELEX AND FACSIMILE COMMITMENT(POUND)
NUMBERS
<S> <C> <C>
The Bank of 46 Berkeley Street 240,000,000
New York London W1X 6AA
Company, Inc. Tel: 0171 322 6017
Fax: 0171 322 6032
Attention: Loans Administration
Canadian Cottons Centre 240,000,000
Imperial Bank Cottons Lane
of Commerce London SE1 2QL
Tel: 0171 234 6000
Fax: 0171 234 6433
Attention: Supervisor, Banking Services
Chemical Bank Trinity Tower 240,000,000
9 Thomas More Street
London E1 9YT
Tel: 0171 777 2170
Fax: 0171 777 2114
Attention: Julian Pitt, Asset Finance
National 135 Bishopsgate 240,000,000
Westminster London EC2M 3UR
Bank Plc Tel: 0171 375 5085
Fax: 0171 375 5820
Telex: 882121
Attention: Portfolio Management
The Toronto- Triton Court 240,000,000
Dominion Bank 14/18 Finsbury Square
London EC2A 1DB
Tel: 0171 920 0272
Fax: 0171 638 2551
Telex: 886142
Attention: Manager, Corporate Services
------------------------------------
1,200,000,000
------------------------------------
</TABLE>
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<PAGE>
SCHEDULE 2
PART A
FORM OF DRAWDOWN NOTICE
To: CIBC Wood Gundy plc
Cottons Centre
Cottons Lane
London SE1 2QL
Attention: Supervisor, Banking Services [Date]
(POUND)1,200,000,000 LOAN FACILITY
LOAN AGREEMENT DATED 22 MAY, 1996
(AS FROM TIME TO TIME AMENDED, VARIED, EXTENDED, RESTATED
OR REPLACED THE "LOAN AGREEMENT")
1. We refer to the above Loan Agreement and hereby give you notice that we
wish to draw a Revolving Advance under Tranche [A]/[B] of (pound)[ ] on
[ ] and select a Term for such Revolving Advance of [ ] months. The
funds should be credited to [NAME AND NUMBER OF ACCOUNT] with [BANK IN
LONDON].
2. We confirm that:
(i) no event or circumstance has occurred and is
continuing which constitutes a Default;
(ii) the representations and warranties referred to in
clause 9.3 including those deemed to be made by the
Borrower pursuant to such clause are (subject as
provided in clause 9.3) true and correct at the date
hereof as if each was made with respect to the facts
and circumstances existing at the date hereof; and
(iii) the borrowing to be effected by such Revolving
Advance will be within our powers, has been validly
authorised by appropriate action and will not cause
any limit on our borrowings (whether imposed by
statute, regulation, agreement or otherwise) to be
exceeded; and
(iv) [if drawdown is to be used to fund an acquisition or
investment within (vi) of "Permitted Investments"]
the investment/acquisition towards which the proceeds
of this drawdown will be applied satisfies the
requirements of paragraph (vi) of the definition of
Permitted Investments.
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<PAGE>
3. We confirm that Consolidated Annualised TCN Group Net Operating Cash
Flow in the most recently delivered Monthly Management Accounts was
[ ].
4. We further confirm that the ratio of the Tranche B Loan (including, for
these purposes, the amount of the Advance the subject of this notice)
to Consolidated Annualised TCN Group Net Operating Cash Flow as
calculated from the most recently delivered Monthly Management Accounts
delivered to the Agent under this Agreement was [ ].
Words and expressions defined in the Loan Agreement shall have the same meanings
where used herein.
For and on behalf of
TELEWEST COMMUNICATIONS NETWORKS LIMITED
................................................
Authorised Officer
105
<PAGE>
SCHEDULE 2
PART B
FORM OF ROLLOVER NOTICE
To: CIBC Wood Gundy plc
Cottons Centre
Cottons Lane
London SE1 2QL
Attention: Supervisor, Banking Services [Date]
(POUND)1,200,000,000 LOAN FACILITY
LOAN AGREEMENT DATED 22 MAY, 1996
(AS FROM TIME AMENDED, VARIED, EXTENDED, RESTATED
OR REPLACED THE "LOAN AGREEMENT")
We refer to the above Loan Agreement and hereby give you notice that we wish to
draw a Revolving Advance of (pound)[ ] on [ ] under Tranche [A/B] and select a
Term for such Revolving Advance of [ ] months. The funds should be applied in
repayment [in part] of the Revolving Advance of (pound)[ ] which falls due to be
repaid on the same day in accordance with clause 4.13 of the Loan Agreement.
Words and expressions defined in the Loan Agreement shall have the same meanings
when used herein.
For and on behalf of
TELEWEST COMMUNICATIONS NETWORKS LIMITED
...........................
Authorised Officer
106
<PAGE>
SCHEDULE 2
PART C
FORM OF CONVERSION NOTICE
To: CIBC Wood Gundy plc
Cottons Centre
Cottons Lane
London SE1 2QL
Attention: Supervisor, Banking Services [Date]
(POUND)1,200,000,000 LOAN FACILITY
LOAN AGREEMENT DATED 22 MAY, 1996
(AS FROM TIME AMENDED, VARIED, EXTENDED, RESTATED
OR REPLACED THE "LOAN AGREEMENT")
We refer to the Revolving Advance made to us of (pound)[ ] on [ ] with a Term of
[ ] under Tranche [A]/[B]. Words and expressions defined in the Loan Agreement
shall have the same meanings when used herein.
We hereby give you notice that we wish to convert such Revolving Advance to a
Revolving Advance under Tranche [A/B] with effect from [ ] (the "CONVERSION
DATE").
We confirm that:
(i) no event or circumstance has occurred and is continuing
which constitutes a Default;
(ii) the representations and warranties referred to in clause
9.3 including those deemed to be made by the Borrower
pursuant to such clause are (subject as provided in clause
9.3) true and correct at the date hereof as if each was
made with respect to the facts and circumstances existing
at the date hereof; and
(iii) the borrowing effected by such Revolving Advance is within
our powers, has been validly authorised by appropriate
action and will not cause any limit on our borrowings
(whether imposed by statute, regulation, agreement or
otherwise) to be exceeded.
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<PAGE>
We confirm that as at the Conversion Date we will be in compliance with clause
4.2 and clause 4.3 of the Loan Agreement.
For and on behalf of
TELEWEST COMMUNICATIONS NETWORKS LIMITED
...................................
Authorised Officer
108
<PAGE>
SCHEDULE 3
DOCUMENTS AND EVIDENCE REQUIRED AS CONDITIONS PRECEDENT
(a) Copies, certified as true, complete and up-to-date copies by the
Company Secretary of the Borrower, of the Memorandum and Articles of
Association of the Borrower.
(b) A copy certified as a true copy by the Company Secretary of
Resolutions of the Board of Directors of the Borrower evidencing
approval of this Agreement and any Security Document to which it is
a party and authorising its appropriate officers to execute and
deliver this Agreement, each Security Document to which it is a
party and to give all notices and take all other action required by
the Borrower under this Agreement and each Security Document to
which it is a party.
(c) A copy, certified as a true copy by the Company Secretary, of
Resolutions of the Board of Directors of TeleWest evidencing
approval of the Deed of Subordination, the TeleWest Assignment and
the RBL Step-In Rights Agreement and authorising its appropriate
officers to execute and deliver the Deed of Subordination, the
TeleWest Assignment and the RBL Step-In Rights Agreement and to give
all notices and to take all action required by it under the Deed of
Subordination, the TeleWest Assignment and the RBL Step-In Rights
Agreement.
(d) Specimen signatures, authenticated by the relevant Company
Secretary, of the persons authorised in the Resolutions of the Board
of Directors referred to in paragraphs (b) and (c) above.
(e) Copies, certified as true copies by the relevant duly authorised
officer from Legibus Secretaries Limited as agents for receipt of
service of process referred to in this Agreement and/or the Security
Documents of acknowledgment of appointment as such.
(f) The Deed of Subordination, the TeleWest Assignment and the RBL
Step-in Rights Agreement having been duly executed and delivered by
TeleWest.
(g) The Security Documents having been duly executed and delivered by
the Borrower and the other applicable TCN Entities.
(h) A notice in the form attached to the Debenture having been given to
each insurer of all or any of the material assets of the Borrower
and each TCN Entity and the same having been agreed and accepted by
each relevant insurer.
(i) Copies, certified as true copies by the Company Secretary of the
Borrower, of each Principal Agreement, the Licences, and each
inter-connect agreement entered into between Mercury Communications
Limited and members of the TCN Group together with a
109
<PAGE>
certificate from the Company Secretary of the Borrower confirming
that such documents are in full force and effect.
(j) Confirmation from Alexander & Alexander that all the assets of the
Borrower and each other TCN Entity are insured in accordance with
the provisions of this Agreement and the Debenture.
(k) An opinion of Norton Rose, solicitors to the Agent, dated no earlier
than 15 days prior to the date of this Agreement.
(l) A letter, addressed to the Agent and the Banks, from KPMG Peat
Marwick stating that in KPMG Peat Marwick's opinion the financial
projections and underlying accounting assumptions of the Agreed Base
Case delivered to the Arrangers prior to the date of this Agreement
are reasonable.
(m) A copy of the budget of the TCN Group for the period commencing on 1
January 1996 and ending on 31 December 1996.
(n) A copy, certified as a true copy by a Director of the Borrower, of
the Agreed Base Case.
(o) A letter from KPMG Peat Marwick confirming that any borrowing limit
set out in TeleWest's Articles of Association will not be exceeded
by the borrowing by the Borrower of all the Commitments.
(p) A letter from a director of TeleWest confirming that as of the first
Drawdown Date there has been no change in the financial position of
the TCN Group which would result in KPMG Peat Marwick's letter being
incorrect if taken as at the first Drawdown Date.
(q) Copies, certified as true, complete and up-to-date copies by the
relevant Company Secretary or Partnership Secretary of the
certificate of incorporation and Memorandum and Articles of
Association of each Original Charging Subsidiary or Partnership
Agreement of each Original Charging Partnership incorporating any
amendments thereto reasonably required by the Agent to ensure each
Original Charging Subsidiary or Original Charging Partnership can
comply with the terms of this Agreement and the Security Documents.
(r) A copy certified as a true copy by the Company Secretary of
Resolutions of the Board of Directors of each Original Charging
Subsidiary and by a Partnership Secretary of Resolutions of the
Partners of each Original Charging Partnership evidencing approval
of this Agreement, and any Security Document to which it is a party
and authorising its appropriate officers to execute and deliver this
Agreement and the Security Documents to which it is a party and to
give all notices and take all other action required by each such
Original Charging Subsidiary or, as the case may be, such Original
Charging Partnership under this Agreement and each Security Document
to which it is a party together with a
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<PAGE>
copy of the resolutions of the authorised representative of each
General Partner of each Charging Partnership evidencing approval of
this Agreement and any Security Document to which it is a party
certified as a true copy by a responsible officer of such General
Partner and certifying as to the authority of such authorised
representative.
(s) Specimen signatures certified by the relevant Company Secretary or
Partnership Secretary of the persons authorised by the resolutions
referred to in paragraph (r) above.
(t) Save where the relevant shares are registered in the name of the
Security Trustee or its nominee, share certificates (together with
any relevant declarations of trust and copies, certified as true
copies by the relevant Company Secretaries of resolutions of the
Boards of Directors of the relevant legal owners authorising the
execution and delivery of such declarations of trust and duly
executed stamped stock transfer forms but with the name of the
transferee left blank) in respect of the entire issued share capital
of the Original Charging Subsidiaries.
(u) Opinions of legal counsel to the Agent in the jurisdiction of
incorporation or formation of each Original Charging Subsidiary and
each Original Charging Partnership dated no earlier than 15 days
prior to the date hereof including an opinion from Morrison &
Foerster together with an opinion from Sherman and Howard L.L.C.,
special legal counsel to the Borrower in Denver, Colorado, dated no
earlier than 15 days prior to the date hereof.
(v) A Pledge and Security Agreement with respect to each of the Original
Charging Partnerships organised under the laws of one of the United
States of America in each case duly executed and delivered by each
and every of the partners in such Original Charging Partnership.
(w) Certificates of valid existence by the appropriate State in relation
to each of the Original Charging Partnerships that is a limited
partnership and is organised under the laws of one of the United
States of America.
(x) Evidence of release of all Encumbrances listed in Part I of Schedule
8.
(y) Certified copies of notices from the relevant Borrowers to the
relevant Agents cancelling the London South/Avon and Scotland
Facilities.
(z) Receipt of all regulatory consents and letters (in the agreed form)
and the effecting of all registrations required in connection with
this Agreement and the Security Documents, including letters from
the ITC, OFTEL and the DTI.
(aa) Confirmation from an authorised officer of the Borrower that a
minimum of (pound)1,750,000,000 of equity and/or subordinated
shareholder loans has been injected into the TCN Group (for these
purposes including predecessor businesses).
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<PAGE>
(ab) Confirmation from an authorised officer of the Borrower that no
member of The TeleWest Group is in default under any existing
financing arrangements including the Senior Securities.
(ac) A UCC-1 financing statement executed by each of the partners in each
of the Original Charging Partnerships that is organised under the
laws of one of the United States of America with respect to their
respective pledges under the Pledge and Security Agreements.
(ad) Certified copy of each Borrower/TeleWest Transfer Agreement.
(ae) Certified copies of those charges detailed at Part II of Schedule 8
and underlying loan documentation, together with a notice to each
party secured by an existing encumbrance, such notice to be in a
form agreed between the Borrower and the Agent, and any
acknowledgements of such notices which the Borrower has, using its
reasonable endeavours, been able to procure.
(af) Certified copies of TeleWest/TCN Group loan documentation and
details of all amounts outstanding thereunder.
(ag) Confirmation from the Company Secretary of the Borrower that there
are no outstanding Encumbrances or Borrowings other than Permitted
Encumbrances/Permitted Borrowings.
(ah) Title documents to all properties to be charged under the Debenture
which are valued at over (pound)500,000 (other than those subject to
a Prior Charge (as defined in the Debenture) where the prior Chargee
has or is entitled to the title documents).
(ai) Disclosure Letter.
(aj) Evidence that interest rate hedging arrangements in accordance with
Clause 10.1(aa) of this Agreement have been put in place, effective
as of the first Drawdown Date.
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<PAGE>
SCHEDULE 4
CALCULATION OF ADDITIONAL COST
1. The Additional Cost for any period is calculated in accordance with
the following formula:
BY + L(Y-X) + S(Y-Z) per cent per annum
100 - (B+S)
where on the day of application of the formula:
B is the percentage of the Agent's eligible liabilities which the
Bank of England then requires the Agent to hold on a
non-interest-bearing deposit account in accordance with its
cash ratio requirements;
Y is the percentage rate at which Sterling deposits are offered
by the Agent to leading banks in the London interbank market at
or about 11 a.m. on that day for the relevant period;
L is the percentage of eligible liabilities which (as a result of
the requirements of the Bank of England) the Agent maintains as
secured money with members of the London Discount Market
Association or in certain marketable or callable securities
approved by the Bank of England;
X is the percentage rate at which secured Sterling investments
may be placed by the Agent with members of the London Discount
Market Association at or about 11 a.m. on that day for the
relevant period or, if greater, the rate at which Sterling
bills of exchange (of a tenor equal to the duration of the
relevant period) eligible for rediscounting at the Bank of
England can be discounted in the London Discount Market at or
about 11 a.m. on that day;
S is the percentage of the Agent's eligible liabilities which the
Bank of England requires the Agent to place as a special
deposit; and
Z is the interest rate expressed as a percentage per annum
allowed by the Bank of England on special deposits.
2. For the purposes of this Schedule 4:
(a) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings
given to them at the time of application of the formula by the
Bank of England; and
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<PAGE>
(b) "RELEVANT PERIOD" in relation to each period for which
Additional Cost falls to be calculated means:
(i) if it is 3 months or less, that period; or
(ii)if it is more than 3 months, 3 months.
3. In the application of the formula, B, Y, L, X, S and Z are included
in the formula as percentages, e.g. if B = 0.5 per cent. and Y = 15
per cent. BY is calculated as 0.5 x 15.
4. The formula is applied on the first day of each relevant period.
Each amount is rounded up (if necessary) to the nearest four decimal
places.
5. If the Agent determines that a change in circumstances has rendered,
or will render, the formula inappropriate, the Agent (after
consultation with all of the Banks) shall notify the Borrower of the
manner in which the Additional Cost will subsequently be calculated.
The manner of calculation so notified by the Agent shall, in the
absence of manifest error, be binding on all the parties.
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SCHEDULE 5
FORM OF SUBSTITUTION CERTIFICATE
BANKS ARE ADVISED NOT TO EMPLOY SUBSTITUTION CERTIFICATES OR OTHERWISE TO ASSIGN
OR TRANSFER INTERESTS IN THE AGREEMENT WITHOUT FIRST ENSURING THAT THE
TRANSACTION COMPLIES WITH ALL APPLICABLE LAWS AND REGULATIONS, INCLUDING THE
FINANCIAL SERVICES ACT 1986 AND REGULATIONS MADE THEREUNDER.
To: CIBC Wood Gundy plc
Cottons Centre
Cottons Lane
London SE1 2QL
Attention: Supervisor, Banking Services [Date]
SUBSTITUTION CERTIFICATE
This Substitution Certificate relates to a Loan Agreement (as from time to time
amended, varied, extended, restated or replaced (the "AGREEMENT") dated 22 May,
1996 between TeleWest Communications Networks Limited as Borrower (1), the
Subsidiaries of the Borrower whose respective names and registered numbers are
set out in part A of Schedule 1 thereto, (2), the Associated Partnerships of the
Borrower whose respective names and principal places of business are set out in
part B of Schedule 1 thereto, (3), the Arrangers (4), the banks and financial
institutions whose respective names and addresses are set out in Part D of
Schedule 1 thereto as Banks (5), the Agent (6) and the Security Trustee (7).
Terms defined in the Agreement shall have the same meaning in this Substitution
Certificate.
1. [Existing Bank] (the "EXISTING BANK") (a) confirms the accuracy of
the summary of its participation in the Agreement set out in the
Schedule hereto; and (b) requests [Substitute Bank] (the
"SUBSTITUTE") to accept by way of novation the portion of such
participation specified in the schedule hereto by countersigning and
delivering this Substitution Certificate to the Agent at its address
for the service of notices specified in the Agreement.
2. The Substitute hereby requests the Agent (on behalf of itself, the
Arrangers, the Security Trustee, the Borrower, the other TCN
Entities, the Banks, the Bond Providers (as defined in the Security
Trust Deed and the Interest Rate Beneficiaries (as defined in the
Security Trust Deed)) to accept this Substitution Certificate as
being delivered to the Agent pursuant to and for the purposes of
clause 17.4 of the Agreement, so as to take effect in accordance
with the respective terms thereof on [date of transfer] (the
"EFFECTIVE DATE") or on such later date as may be determined in
accordance with the terms thereof.
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3. The Agent (on behalf of itself, the Arrangers, the Security Trustee,
the Borrower, the other TCN Entities, the Banks, the Bond Providers
(as defined in the Security Trust Deed and the Interest Rate
Beneficiaries (as defined in the Security Trust Deed)) confirms the
novation effected by this Substitution Certificate pursuant to and
for the purposes of clause 17.4 of the Agreement so as to take
effect in accordance with the terms thereof.
4. The Substitute confirms:
(a) that it has received a copy of the Agreement, the Security
Documents and all other documentation and information required
by it in connection with the transactions contemplated by this
Substitution Certificate;
(b) that it has made and will continue to make its own assessment
of the validity, enforceability and sufficiency of this
Agreement and the Security Documents and the Substitution
Certificate and has not relied and will not rely on the
Existing Bank, any Arranger, the Security Trustee, any other
Bank or the Agent or any statements made by any of them in
that respect;
(c) that it has made and will continue to make its own credit
assessment of the Borrower, each other TCN Entity and TeleWest
and has not relied and will not rely on the Existing Bank, any
Arranger, the Security Trustee, any other Bank or any
statements made by any of them in that respect;
(d) accordingly, none of the Existing Bank, any Arranger, the
Security Trustee, any other Bank or the Agent shall have any
liability or responsibility to the Substitute in respect of
any of the foregoing matters; and
(e) it is a Qualifying Bank.
5. Execution of this Substitution Certificate by the Substitute
constitutes its representation to the Existing Bank and all other
parties to the Agreement and the Security Trust Deed that it has
power to become party to the Agreement and the Security Trust Deed
as a Bank on the terms herein and therein set out and has taken all
necessary steps to authorise execution and delivery of this
Substitution Certificate.
6. The Existing Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the Agreement or the
Security Documents or any document relating thereto and assumes no
responsibility for the financial condition of the Borrower, each
other TCN Entity and TeleWest or any other party to the Agreement or
the Security Documents or for the performance and observance by the
Borrower, each other TCN Entity and TeleWest or any other such party
of any of its obligations under the Agreement or the Security
Documents or any document
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relating thereto and any and all such conditions and warranties,
whether express or implied by law or otherwise, are hereby excluded.
7. The Substitute hereby undertakes to the Existing Bank, the Borrower,
the other TCN Entities, the Arrangers, the Security Trustee, the
other Banks, the Bond Providers, the Interest Rate Beneficiaries and
the Agent that it will perform in accordance with their terms all
those obligations which by the respective terms of the Agreement and
the Security Documents will be assumed by it after acceptance of
this Substitution Certificate by the Agent.
8. This Substitution Certificate and the rights and obligations of the
parties hereunder are governed by and shall be construed in
accordance with English law.
NOTE: This Substitution Certificate is not a security, bond, note,
debenture, investment or similar instrument.
AS WITNESS the hands of the authorised signatories of the parties hereto on the
date appearing below.
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THE SCHEDULE
AMOUNT OF NEXT INTEREST PORTION NOVATED
CONTRIBUTION PAYMENT DATE(S) ((POUND))
Tranche A Advance(s)
Tranche B Revolving
Advance(s)
Tranche B Term
Advance(s)
AMOUNT OF COMMITMENT PORTION NOVATED ((POUND))
ADMINISTRATIVE DETAILS OF SUBSTITUTE
Lending office:
Account for payments:
Telephone:
Telex:
Fax:
Attention:
[Existing Bank] [Substitute]
By: By:
Date: Date:
The Agent
By:
Date:
on its own behalf
and on behalf of the Borrower, the other TCN Entities, the Arrangers, the
Security Trustee, the Bond Providers, the Interest Rate Beneficiaries and the
Banks.
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SCHEDULE 6
PART A
FORM OF COMPLIANCE CERTIFICATE TO BE ISSUED BY AN
AUTHORISED OFFICER OF THE BORROWER
CIBC Wood Gundy plc
Cottons Centre
Cottons Lane
London SE1 2QL
Attention: Supervisor, Banking Services [Date]
Dear Sirs
TELEWEST COMMUNICATIONS NETWORKS LIMITED
(POUND)1,200,000,000 LOAN FACILITY, LOAN AGREEMENT
DATED 22 MAY, 1996 (AS FROM TIME TO TIME AMENDED, VARIED,
EXTENDED, RESTATED OR REPLACED
(THE "LOAN AGREEMENT")
We refer to the Loan Agreement and deliver this Certificate in respect of the
Quarterly Period ended [ ] pursuant to clause 10.1(j)(a)(ii) thereof. Terms
defined in the Loan Agreement shall have the same meaning when used in this
Certificate. Net Operating Cashflow shall herein be defined as "NOCF".
We confirm that on or as of the last day of the Quarterly Period ending [ ]:
1. Consolidated TCN Group Net Operating Cashflow for the Six Month Period
ended [ ] was [ ].
2. **Consolidated Annualised TCN Group NOCF for the Six Month Period ended
[ ], was [ ].
3. **Total TCN Group Debt as at [ ] was [ ].
4. **Tranche B Loan as at [ ] was [ ].
5. ***Facility Debt Interest Charges for the Six Month Period ended
[ ] was [ ].
6. ****Total TCN Group Cash Paying Debt Interest Charges for the Six Month
Period ended [ ] was [ ].
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7. ****Consolidated TeleWest Group NOCF for the Six Month Period ended
[ ] was [ ].
8. ****Total TeleWest Group Cash Paying Debt Interest Charges for the Six
Month Period ended [ ] was [ ].
9. *****On the basis of projections provided by TeleWest management,
Pro-forma Total TeleWest Group Debt Service for the twelve months
commencing [ ] is [ ].
10. ******On the basis of projections provided by TeleWest management,
Proforma Total TCN Group Debt Service for the twelve months commencing
[ ].
Based on the above, we confirm that on [ ]:
(1) *Actual Consolidated TCN Group NOCF divided by Consolidated TCN Group
NOCF as set out in the Agreed Base Case was [ %].
(2) **Tranche B Loan divided by Consolidated Annualised TCN Group NOCF was
[ x].
(3) ***Consolidated TCN Group NOCF divided by Facility Debt Interest Charges
was [ x].
(4) ****Consolidated TCN Group NOCF divided by Total TCN Group Cash Paying
Debt Interest Charges was [ x].
(5) ****Consolidated TeleWest Group NOCF divided by Total TeleWest Group
Cash Paying Debt Interest Charges was [ x].
(6) *****Consolidated Annualised TeleWest Group NOCF divided by Proforma
Total TeleWest Group Debt Service was [ x].
(7) ******Consolidated Annualised TCN Group NOCF divided by Proforma Total
TCN Group Debt Service was [ x].
Based on the above, we confirm that the Borrower was in compliance with the
undertakings set out in clause 12.1(a) to (g) as at [ ].
We also confirm that the representations and warranties referred to in clause
9.3 including those deemed to be made by the Borrower pursuant to such clause
are (subject as provided in clause 9.3)
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true and correct at the date hereof as if each was made with respect to the
facts and circumstances existing at the date hereof.
FOR AND ON BEHALF OF
TELEWEST COMMUNICATIONS
NETWORKS LIMITED
........................................
Authorised Officer
* To be reported until Total TCN Group Debt: Consolidated Annualised
TCN Group NOCF is equal to or less than 5.0x for two consecutive
quarters
** To be reported with effect from 30 September 1996
*** To be reported with effect from 31 March 1997
**** To be reported with effect from 31 March 1998
***** To be reported with effect from 31 March 1999
****** To be reported with effect from 31 June 2000
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PART B
FORM OF COMPLIANCE CERTIFICATE TO BE ISSUED BY THE
AUDITORS OF THE TCN GROUP
CIBC Wood Gundy plc
Cottons Centre
Cottons Lane
London SE1 2QL
Attention: Supervisor, Banking Services
Dear Sirs
TELEWEST COMMUNICATIONS NETWORKS LIMITED
(POUND)1,200,000,000 LOAN FACILITY, LOAN AGREEMENT DATED 22 MAY, 1996
AS FROM TIME TO TIME AMENDED, VARIED, EXTENDED, RESTATED OR
REPLACED (THE "LOAN AGREEMENT")
We refer to the Loan Agreement and, in accordance with our instructions, deliver
this Certificate in respect of the financial year ended 31 December [ ]
pursuant to clause 10.1(j)(a)(ii) thereof. Terms defined in the Loan Agreement
shall have the same meaning when used in this Certificate. Net Operating
CashFlow shall be defined as "NOCF".
On the basis of the consolidated audited accounts of the Borrower and TeleWest
for the financial year ended 31 December [ ] and on the basis of unaudited
management accounts for the six month period ended 30 June [ ], we confirm that:
1. Consolidated TCN Group Net Operating Cashflow for the Six Month Period
ended [ ] was [ ].
2. **Consolidated Annualised TCN Group NOCF for the Six Month Period ended
[ ], was [ ].
3. **Total TCN Group Debt as at [ ] was [ ].
4. **Tranche B Loan as at [ ] was [ ].
5. ***Facility Debt Interest Charges for the Six Month Period ended [ ]
was [ ].
6. ****Total TCN Group Cash Paying Debt Interest Charges for the Six Month
Period ended 31 December [ ] was [ ].
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7. ****Consolidated TeleWest Group NOCF for the Six Month Period ended
[ ] was [ ].
8. ****Total TeleWest Group Cash Paying Debt Interest Charges for the Six
Month Period ended [ ] was [ ].
9. *****On the basis of projections provided by TeleWest management,
Pro-forma Total TeleWest Group Debt Service for the twelve months
commencing [ ] is [ ].
10. ******On the basis of projections provided by TeleWest management,
Proforma Total TCN Group Debt Service for the twelve months commencing
[ ].
Based on the above, we confirm that on [ ]:
(A) *Actual Consolidated TCN Group NOCF divided by Consolidated TCN Group
NOCF as set out in the Agreed Base Case was [ %].
(B) **Tranche B Loan divided by Consolidated Annualised TCN Group NOCF was
[ x].
(C) ***Consolidated TCN Group NOCF divided by Facility Debt Interest Charges
was [ x].
(D) ****Consolidated TCN Group NOCF divided by Total TCN Group Cash Paying
Debt Interest Charges was [ x].
(E) ****Consolidated TeleWest Group NOCF divided by Total TeleWest Group
Cash Paying Debt Interest Charges was [ x].
(F) *****Consolidated Annualised TeleWest Group NOCF divided by Proforma
Total TeleWest Group Debt Service was [ x].
(G) ******Consolidated Annualised TCN Group NOCF divided by Proforma Total
TCN Group Debt Service was [ x].
Based on the above, we confirm that the Borrower was in compliance with the
undertakings set out in clause 12.1(a) to (g) as at [ ].
FOR AND ON BEHALF OF
..........................................................
Auditors
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* To be reported until Total TCN Group Debt: Consolidated Annualised
TCN Group NOCF is equal to or less than 5.0x for two consecutive
quarters
** To be reported with effect from 31 December 1996
*** To be reported with effect from 31 December 1997
**** To be reported with effect from 31 December 1998
***** To be reported with effect from 31 December 1999
****** To be reported with effect from 31 December 2000
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SCHEDULE 7
FORM OF DEED OF SUBORDINATION
DATED 22 MAY 1996
TELEWEST COMMUNICATIONS PLC
and
CIBC WOOD GUNDY PLC
as Security Trustee
---------------------------------------------
DEED OF SUBORDINATION
---------------------------------------------
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THIS DEED OF SUBORDINATION is dated 22 May, 1996 and made
BETWEEN:
(1) TELEWEST COMMUNICATIONS PLC (Company No. 2983307) whose registered office
is at Genesis Business Park, Albert Drive, Woking, Surrey GU21 5RW (the
"CREDITOR"); and
(2) CIBC WOOD GUNDY PLC of Cottons Centre, Cottons Lane, London SE1 2QL in
its capacity as Security Trustee for the Beneficiaries (as defined below)
(in this capacity, the "SECURITY TRUSTEE").
WHEREAS
(A) By an agreement dated 22 May, 1996 (as from time amended, varied,
extended, restated or replaced the "LOAN AGREEMENT") and made between
TeleWest Communications Networks Limited as Borrower (1), certain
Subsidiaries of the Borrower (2), certain Associated Partnerships of the
Borrower (3), the Arrangers (4), the banks and financial institutions
whose names and addresses are set out in Part D of Schedule 1 thereto,
(5) the Agent (6) and the Security Trustee (7), the Banks agreed, upon
and subject to the terms and conditions of the Loan Agreement, to make
available to the Borrower a revolving credit facility converting to a
reducing term loan of up to(pound)1,200,000,000.
(B) The execution of this Deed is one of the conditions precedent to the
obligation of each Bank to make its Commitment available under the Loan
Agreement.
NOW IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Deed, unless the context otherwise requires:
"BENEFICIARIES" has the meaning ascribed thereto in the Security Trust Deed;
"COLLATERAL INSTRUMENTS" means the Security Documents, any guarantees and any
other documents or instruments (including, without limitation, any other
document or instrument creating or evidencing a mortgage, charge (whether fixed
or floating), pledge, lien, hypothecation, assignment, trust arrangement or
security interest of any kind) which contain or evidence an obligation (with or
without security) to pay, discharge or be responsible directly or indirectly for
any of the Secured Liabilities under or pursuant to the Loan Agreement;
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"INCAPACITY" means in relation to a person the death, bankruptcy, insolvency,
liquidation, dissolution, winding-up, administration, receivership,
amalgamation, reconstruction or other incapacity of that person whatsoever (and,
in the case of a partnership, includes the termination or change in the
composition of such partnership);
"INSOLVENCY EVENT" means, in relation to the Borrower or any of its Subsidiaries
or Associated Partnerships (other than any Immaterial Group Entities) any of the
events or circumstances described in clause 13.1(h) to (n) inclusive of the Loan
Agreement;
"INSOLVENCY PROCEEDINGS" means winding-up, dissolution, liquidation,
receivership, administration, voluntary arrangements, proceedings under Title 11
of the United States Bankruptcy Code or any proceedings in any jurisdiction
which correspond with or have an effect equivalent to any of the same;
"LIABILITIES" means all obligations and liabilities whatsoever, whether express
or implied, whether as principal or surety, whether present or future, actual or
contingent, whether joint or several, in whatever style, name or form and in
whatever currency denominated;
"PERMITTED AMOUNTS" means all amounts which the Borrower or any of its
Subsidiaries are permitted to pay pursuant to Clauses 11.1(l), (m) and (n) of
the Loan Agreement;
"SECURED LIABILITIES" means all obligations, present, future or contingent,
joint or several, of any TCN Entity pursuant to the Loan Agreement and/or any
Security Document; and
"SECURITY PROVIDER" means any person who has or may at any time hereafter enter
into a Collateral Instrument.
1.2 DEFINED EXPRESSIONS
Unless the context requires or unless otherwise defined in this Deed, words and
expressions defined in the Loan Agreement shall have the same meaning when used
in this Deed (including its Recitals).
1.3 HEADINGS
Clause headings are inserted for convenience of reference only and shall be
ignored in the interpretation of this Deed.
1.4 CONSTRUCTION OF CERTAIN TERMS
In this Deed, unless the context otherwise requires:
(a) references to clauses are to be construed as references to the
clauses of this Deed;
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(b) reference to (or to any specified provision of) this Deed or any
other document shall be construed as references to this Deed, that
provision or that document as in force for the time being and as
amended in accordance with the terms thereof or, as the case may be,
with the agreement of the relevant parties and (where such consent
is, by the terms of this Deed or the relevant document, required to
be obtained as a condition to such amendment being permitted) the
prior written consent of the Agent, the Security Trustee, all of the
Banks, the Majority Banks or the Beneficiaries (as the case may be);
(c) references to a "regulation" include any present or future
regulation, rule, directive, requirement, request or guideline
(whether or not having the force of law) of any agency, authority,
central bank or government department or any self-regulatory or
other national or supra-national authority;
(d) words importing the plural shall include the singular and vice
versa;
(e) references to a time of day are to London time;
(f) references to a person shall be construed as including references to
an individual, firm, company, corporation, unincorporated body of
persons or any State or any agency thereof;
(g) reference to "set-off" includes retention, compensation and
balancing of accounts under Scots law;
(h) references to a "guarantee" include references to an indemnity or
other assurance against financial loss including, without
limitation, an obligation to purchase assets as a consequence of
default by any other person to pay any Indebtedness and "guaranteed"
shall be construed accordingly; and
(i) references to any enactment shall be deemed to include references to
such enactment as replaced, amended or re-enacted from time to time.
1.5 EFFECT AS A DEED
This Deed is intended to take effect as a deed notwithstanding that the Security
Trustee and/or the Creditor may have executed it under hand only.
1.6 SUCCESSORS AND ASSIGNS
The expressions "BENEFICIARY", "SECURITY TRUSTEE", "BORROWER", "TCN ENTITY",
"AGENT", "ARRANGER", "BANK", "SECURITY PROVIDER" and "CREDITOR" include, where
the context admits, their respective successors, permitted assigns, in the case
of the Banks, their Assignees and Substitutes, in the case of the Security
Trustee such other person as may from time to time be appointed as Security
Trustee for the Beneficiaries pursuant to the terms of the Security Trust Deed
and, in the case of the
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Agent, such other person as may from time to time be appointed as Agent pursuant
to clause 18.11 of the Loan Agreement.
2. RESTRICTED PAYMENTS
The Creditor undertakes with the Security Trustee that so long as any of the
Secured Liabilities remain outstanding:
(a) it will not, and will procure that none of its Subsidiaries or
Associated Partnerships (which are not TCN Entities) demand, take,
accept or receive, by set-off or in any other manner, any Restricted
Payment other than a Permitted Amount;
(b) it will not, and will procure that none of its Subsidiaries or
Associated Partnerships (which are not TCN Entities) take, accept,
receive or permit to exist any Encumbrance over all or any part of
the present or future undertakings, assets, rights or revenues of
any member of the TCN Group to secure any Restricted Payment;
(c) it will not, and will procure that none of its Subsidiaries, or
Associated Partnerships (which are not TCN Entities) assign,
transfer, create any Encumbrance over or otherwise dispose of any
Restricted Payment other than a Permitted Amount; and
(d) it will not, and will procure that none of its Subsidiaries or
Associated Partnerships (which are not TCN Entities) commence any
proceedings against any member of the TCN Group in respect of any
Restricted Payment, (including, without limitation, any action or
step with a view to winding-up any member of the TCN Group).
3. SUBORDINATION
3.1 INSOLVENCY EVENTS
Upon an Insolvency Event occurring in respect of any TCN Entity:
(a) the claims of the Creditor in respect of any Restricted Payment owed
by that TCN Entity other than any Permitted Amounts shall be
postponed in all respects to the Secured Liabilities;
(b) the Creditor shall not, unless otherwise directed by the Security
Trustee, prove in any Insolvency Proceedings for any Restricted
Payment, other than the Permitted Amounts until the Secured
Liabilities have first been irrevocably paid or discharged in full
(and for all purposes any payment or distribution of assets (whether
in cash, property, securities or otherwise) received by the Security
Trustee or any of the Beneficiaries shall only be taken to discharge
the Secured Liabilities to the extent of the actual amount
received);
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(c) if the Creditor is directed by the Security Trustee to prove in any
Insolvency Proceedings for all or any part of any Restricted
Payment, other than any Permitted Amounts then it shall act in
accordance with such directions and shall procure that any resultant
payment or distribution of assets (whether in cash, property,
securities or otherwise) shall be made by the liquidator of any
member of the TCN Group or, as the case may be, any other person
making the payment or distribution of assets (whether in cash,
property, securities or otherwise) to the Security Trustee to the
extent necessary to repay all the Secured Liabilities in full; and
(d) the Creditor hereby irrevocably authorises and directs the Security
Trustee to submit any proof and/or to instruct the relevant
liquidator or other person to make any payment or distribution of
assets (whether in cash, property, securities or otherwise) in
accordance with the foregoing.
3.2 PAYMENTS CONTRARY TO THIS DEED
In the event of:
(a) any payment or distribution of assets (whether in cash, property,
securities or otherwise) being made to or right of set-off being
exercised by the Creditor contrary to the provisions of this Deed;
or
(b) any payment or distribution of assets (whether in cash, property,
securities or otherwise) being made by a liquidator or any other
person to the Creditor rather than to the Security Trustee as
required by clause 3.1,
the Creditor shall forthwith pay to the Security Trustee an amount equal to the
payment or distribution of assets (whether in cash, property, securities or
otherwise) which shall have been so received by it up to an aggregate amount
equal to the Secured Liabilities or, as the case may be, in the case of set-off,
an amount equal to the sum set-off up to an aggregate amount equal to the
Secured Liabilities and, until such payment to the Security Trustee, the
Creditor will hold such sums on trust for the Security Trustee (provided that,
for the avoidance of doubt, this clause 3.2 shall not oblige the Creditor to
create any Encumbrance in favour of the Security Trustee over such money or
other property) and any sums so paid to the Security Trustee shall be applied in
accordance with the terms of the Security Trust Deed.
3.3 SUBROGATION
If the Secured Liabilities are partially paid out of any proceeds received in
respect of or on account of any Restricted Payment, the Creditor will not be
subrogated to the Secured Liabilities so paid (or any Collateral Instrument)
until the Secured Liabilities have been irrevocably paid in full.
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4. CONTINUING OBLIGATIONS
4.1 CONTINUING OBLIGATIONS
The obligations of the Creditor hereunder shall be continuing obligations and
shall be and remain fully effective until this Deed is formally released
following the discharge in full of the Secured Liabilities notwithstanding any
intermediate reduction or settlement of the Secured Liabilities or any part
thereof and notwithstanding any increase in or variation of the Secured
Liabilities or any variation, extension or supplement to the Loan Agreement or
any Security Documents.
4.2 STATEMENTS OF ACCOUNTS
Any statement of account of any TCN Entity, signed as correct by an officer of
the Security Trustee, showing the amount of the Secured Liabilities shall be
prima facie evidence of the amount of the Secured Liabilities.
4.3 CONTINUING SECURITY AND OTHER MATTERS
This Deed shall:
(a) secure the ultimate balance from time to time of the Secured
Liabilities and shall be a continuing security, notwithstanding any
settlement of account or other matter whatsoever;
(b) be in addition to any present or future Collateral Instrument, right
or remedy held by or available to the Security Trustee, the
Beneficiaries or any of them; and
(c) not be in any prejudiced by the existence of any such Collateral
Instrument, rights or remedies or by the same becoming wholly or in
part void, voidable or unenforceable on any ground whatsoever or by
the Security Trustee, the Beneficiaries or any of them dealing with,
exchanging, varying or failing to perfect or enforce any of the same
or giving time for payment or indulgence or compounding with the
Borrower or any Security Provider.
4.4 LIABILITY UNCONDITIONAL
The liability of the Creditor shall not be affected, discharged or reduced by
reason of:
(a) the Incapacity or any change in the name, style or constitution of
the Borrower or any other Security Provider;
(b) the Security Trustee, the Beneficiaries or any of them granting any
time, indulgence or concession to, or compounding with, discharging,
releasing or varying the liability of, the Borrower or any other
Security Provider or renewing, determining, varying or increasing
any accommodation, facility or transaction or otherwise dealing with
the same in any
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manner whatsoever or concurring in, accepting or varying any
compromise, arrangement or settlement or omitting to claim or
enforce payment from the Borrower or any other Security Provider; or
(c) any act or omission which but for this provision might operate to
exonerate the Creditor.
4.5 COLLATERAL INSTRUMENTS
None of the Beneficiaries or the Security Trustee shall be obliged to make any
claim or demand on the Borrower or any other Security Provider or to resort to
any Collateral Instrument or other means of payment now or hereafter held by or
available to them or it before enforcing this Deed and no action taken or
omitted by the Security Trustee or any Beneficiary in connection with any such
Collateral Instrument or other means of payment shall discharge, reduce,
prejudice or affect the liability of the Creditor under this Deed nor shall the
Security Trustee or any Beneficiary be obliged to account for any money or other
property received or recovered in consequence of any enforcement or realisation
of any such Collateral Instrument or other means of payment.
4.6 SUSPENSE ACCOUNTS
Any money received in connection with this Deed (whether before or after any
Incapacity of the Borrower, any other Security Provider or the Creditor) may be
placed to the credit of an interest bearing suspense account with a view to
preserving the rights of the Security Trustee and each Beneficiary to prove for
the whole of their respective claims against the Borrower or any other person
liable or may be applied in or towards satisfaction of such of the Secured
Liabilities as the Security Trustee may from time to time determine in
accordance with the terms of the Security Trust Deed (which determination shall,
save in the case of manifest error, be conclusive). Interest shall accrue on
monies from time to time standing to the credit of any suspense account at the
rate agreed between the Security Trustee and the Creditor at the relevant time
or, failing such agreement, the Security Trustee's overnight deposit rate from
time to time and shall be credited to such suspense account or may be applied in
or towards satisfaction of such of the Secured Liabilities as the Security
Trustee may from time to time determine in accordance with the terms of the
Security Trust Deed (which determination shall, save in the case of manifest
error, be conclusive).
4.7 SETTLEMENTS CONDITIONAL
Any release, discharge or settlement between the Creditor and the Security
Trustee or any of the Beneficiaries shall be conditional upon no security,
disposition or payment to the Security Trustee, or any of the Beneficiaries by
the Borrower or any other person liable being void, set aside or ordered to be
refunded pursuant to any enactment or law relating to bankruptcy, liquidation,
administration or insolvency or for any other reason whatsoever and if such
condition shall not be fulfilled the Security Trustee shall be entitled to
enforce this Deed subsequently as if such release, discharge or settlement had
not occurred and any such payment had not been made.
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4.8 RETENTION OF THIS DEED
Notwithstanding any other provision of this Deed, this Deed shall not be
released, the Security Trustee shall be entitled to retain this Deed and all the
provisions of this Deed shall remain in full force and effect until the
irrevocable payment or discharge in full of all the Secured Liabilities.
Following the irrevocable payment or discharge in full of all the Secured
Liabilities, the Security Trustee shall forthwith release this Deed (and to
effect or evidence such release shall execute such documents (at the cost of the
Creditor) as the Creditor may reasonably require) and deliver this Deed,
together with such documents, to the Creditor.
5. REPRESENTATIONS AND WARRANTIES
5.1 REPRESENTATION AND WARRANTIES
The Creditor represents and warrants to the Security Trustee that:
(a) Due Incorporation
it is duly incorporated, validly existing as a limited liability
company and has all requisite corporate power and authority to own
its property and other assets and to carry on its business as it is
now being conducted and is authorised to do business in each
jurisdiction where such qualification or authorisation is required,
except where the failure to so qualify, to be so authorised or to be
in good standing would not have a material adverse effect on the
ability of the Creditor to perform any of its obligations under this
Deed;
(b) Power of the Creditor
the Creditor has all requisite power to execute, deliver and perform
its obligations under this Deed and compliance has been made with
all necessary requirements and all necessary action has been taken
to authorise the execution, delivery and performance of the same;
(c) Binding obligations
this Deed constitutes valid and legally binding obligations of the
Creditor enforceable in accordance with its terms subject to the
qualifications contained in the legal opinions referred to in
schedule 3 to the Loan Agreement which relate to this Deed and for
this purpose any statement contained in the qualifications to any
such legal opinion which relate to this Deed that no opinion is
given or expressed in relation to any particular matter shall be
deemed to be a qualification of such opinion as regards such matter;
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(d) No conflict with other obligations
the execution and delivery of, the performance of its obligations
under, and compliance with the provisions of, this Deed by the
Creditor, will not (i) contravene any existing applicable law,
statute, rule or regulation or any judgment, decree or permit to
which the Creditor is subject except where such contravention would
not or would not be likely to have a material adverse effect on the
ability of the Creditor to perform any of its obligations under or
otherwise to comply with the terms of this Deed, (ii) contravene or
conflict with any provision of the Memorandum and Articles of
Association of the Creditor, (iii) breach any term of the Licences
or the Necessary Authorisations, (iv) conflict with, or result in
any breach of any of the terms of, or constitute a default under,
any agreement to which the Creditor is a party or is subject or by
which it or any of its property is bound except where such breach or
default would not or would not be likely to have a material adverse
effect on the ability of the Creditor to perform any of its
obligations under or otherwise to comply with the terms of this Deed
or (v) result in the creation or imposition of or oblige the
Creditor to create any Encumbrance (other than those created by the
Security Documents) on any of the Creditor's material undertakings,
assets, rights or revenues;
(e) No litigation
no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the Creditor
threatened against the Creditor which would or is reasonably likely
to have a material adverse effect on the ability of the Creditor to
fulfil its obligations under this Deed;
(f) No filing required
it is not necessary to ensure the legality, validity, enforceability
or admissibility in evidence of this Deed that this Deed or any
other instrument be notarised, filed, recorded, registered or
enrolled in any court or public office in the United Kingdom or that
any stamp, registration or similar tax or charge be paid in the
United Kingdom on or in relation to this Deed;
(g) Choice of law
the choice by the Creditor of English law to govern this Deed is
valid and binding;
(h) Consents obtained
every consent, authorisation, licence or approval of, or
registration with or declaration to, governmental or public bodies
or authorities or courts required by the Creditor (i) to authorise
the execution and delivery of this Deed or the performance by the
Creditor of its obligations under this Deed or (ii) to ensure the
validity, enforceability or admissibility in
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evidence of this Deed or the performance by the Creditor of its
obligations under this Deed has been obtained or made and is in full
force and effect and there has been no material default in the
observance of the conditions or restrictions (if any) imposed in, or
in connection with, any of the same which would, in any such case,
adversely affect the execution, delivery, validity, enforceability
or admissibility in evidence of this Deed or the performance by the
Creditor of its obligations under this Deed.
5.2 REPETITION
The representations and warranties in clause 5.1 shall be deemed to be repeated
by the Creditor in respect of itself and its Subsidiaries on and as of each
Interest Payment Date and the date on which each Revolving Advance is made under
the Loan Agreement.
6. COVENANTS
6.1 COVENANTS BY TELEWEST
The Creditor hereby undertakes with the Security Trustee that from the date of
this Deed and so long as any of the Secured Obligations remain outstanding or
any Beneficiary remains under any commitment to any TCN Entity:
(a) New Debt
all Borrowed Money incurred or assumed by the Creditor after the
date of the Loan Agreement (herein "NEW DEBT") will have a
contractual maturity date falling not earlier than 1 January 2007
(and will be on terms which would not reasonably be considered by
the Agent (acting on the instructions of the Majority Banks) to be
materially more onerous than the terms currently applying to
existing Senior Securities) except for;
(i) Finance Leases where the asset in question has been
sub-Finance Leased by TeleWest to a TCN Entity and such
sub-Finance Lease falls within paragraph (v) of the definition
of Permitted Borrowings;
(ii) Borrowed Money where (a) the lender is a TCN Entity and (b)
the relevant payment by the TCN Entity in question is a
Permitted Payment;
(iii) Borrowed Money comprising a guarantee or indemnity of any
obligations of a TCN Entity;
(iv) Borrowed Money resulting from a refinancing of any Borrowed
Money of the Creditor outstanding at the date hereof provided
that the principal amount thereof is not increased, the term
thereof is not decreased and the terms and conditions thereof
taken as a whole (taking into account the pricing, covenants
(unless TeleWest shall
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have entered into covenants in substantially the same form
with or for the benefit of the Banks) and term) are not
materially more onerous than the terms applying to the
existing Borrowed Money;
(v) any hedging entered into (1) in compliance with paragraph (g)
below, (2) in connection with any Borrowed Money falling
within paragraph (iv) of this clause 6.1(a) or (3) in
connection with any Borrowed Money having a contractual
maturity date falling not earlier than 1 January 2007; and
(vi) any Borrowed Money not within sub-paragraphs (i) to (v)
(inclusive) above and not exceeding in aggregate
(pound)5,000,000;
(b) Rolling Gateway
the Creditor will not incur or assume any Borrowed Money after the
date hereof (other than Borrowed Money referred to in paragraphs (i)
to (v) of clause 6.1(a)) unless at the time of incurring or assuming
the same and immediately following such incurrence or assumption the
ratio of Total TeleWest Group Debt to Consolidated Annualised
TeleWest Group Net Operating Cash Flow is equal to or less than
4.0:1.
(c) Change to Senior Securities
to ensure that there is no change to the terms and conditions of the
Senior Securities which would reasonably be considered to be
materially adverse by the Agent (acting on the instructions of the
Majority Banks).
(d) Nature of Acquisitions
not to make any acquisitions of any companies or businesses other
than those engaged in the cable/telecommunications business, any
television and/or licensing business or any programming guide or
telephone directory business.
The above prohibition will cease and shall have no further effect on
the first occasion upon which the ratio of Total TeleWest Group Debt
to Consolidated Annualised TeleWest Group Operating Cash Flow is or
is less than 5 to 1.
(e) Adequacy of finance
to ensure that for a period of at least 18 months following the
acquisition by any Restricted Person of a cable television and/or
telecommunications franchise adequate monies are available to the
relevant Restricted Person to finance the working capital and
capital expenditure requirements of such franchise.
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(f) Financial Information
to provide to the Agent copies of all circulars, statements and
other information about the Creditor at the time that the same is
made generally available by the Creditor to the public or to the
shareholders of the Creditor, including, without limitation, Forms
10K and 10Q (and any equivalent replacement thereof) for the
TeleWest Group.
(g) Hedging
to maintain foreign exchange arrangements in relation to the Senior
Securities which cap the Sterling amount of the liabilities under
the Senior Securities at no more than the maximum sterling amount
payable under the hedging arrangements in place at the date hereof
in relation to the Senior Securities.
(h) Borrower to be wholly-owned
to ensure that the Borrower remains its wholly-owned and controlled
Subsidiary.
7. BENEFIT OF THIS DEED
7.1 BENEFIT AND BURDEN
This Deed shall be binding upon the Creditor and its successors in title and
shall enure for the benefit of the Security Trustee (and any successor Security
Trustee appointed pursuant to the provisions of the Security Trust Deed) and
their respective successors for the benefit of the Beneficiaries in accordance
with the provisions of the Security Trust Deed.
7.2 CHANGES IN CONSTITUTION OR REORGANISATION OF BANKS
For the avoidance of doubt and without prejudice to the provisions of clause
7.1, this Deed shall remain binding on the Creditor notwithstanding any change
in the constitution of the Security Trustee or any of the Beneficiaries or their
or its absorption in, or amalgamation with, or the acquisition of all or part of
their or its undertaking or assets by, any other person, or any reconstruction
or reorganisation of any kind, to the intent that this Deed shall remain valid
and effective in all respects in favour of the Security Trustee (and any
successor Security Trustee appointed pursuant to the provisions of the Security
Trust Deed and their respective successors in title) as trustee for the
Beneficiaries and any assignee, transferee or other successor in title of a
Beneficiary.
7.3 NO ASSIGNMENT BY THE CREDITOR
The Creditor may not assign or transfer any of its rights or obligations under
this Deed.
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7.4 THE SECURITY TRUST DEED
The Creditor and the Security Trustee hereby acknowledge that the covenants of
the Creditor contained in this Deed and the rights constituted by this Deed and
all moneys, property and assets paid to, or held, received or recovered by the
Security Trustee pursuant to or in connection with this Deed are held by the
Security Trustee subject to and on the terms of the trusts declared in the
Security Trust Deed.
8. NOTICES AND OTHER MATTERS
8.1 NOTICES
Every notice, request, demand or other communication under this Deed shall be
given in accordance with clause 19.1(a) and (b) of the Loan Agreement and shall
be sent to the Creditor at its address set out above (facsimile number: 01483
750901) or to the Security Trustee at its address or telex or facsimile number
set out in clause 19.1(c)(ii) of the Loan Agreement or to such other address or
such telex or facsimile number as is notified by one party to this Deed to the
other.
8.2 NO IMPLIED WAIVERS, REMEDIES CUMULATIVE
No failure or delay on the part of the Security Trustee or the Beneficiaries (or
any of them) to exercise any power, right or remedy under this Deed shall
operate as a waiver thereof, nor shall any single or partial exercise by the
Security Trustee or the Beneficiaries (or any of them) of any power, right or
remedy preclude any other or further exercise thereof or the exercise of any
other power, right or remedy. The remedies provided in this Deed are cumulative
and are not exclusive of any remedies provided by law.
8.3 OTHER COLLATERAL INSTRUMENTS
The Creditor agrees to be bound by this Deed notwithstanding that any other
person intended to execute or to be bound by any Collateral Instrument may not
do so or may not be effectively bound and notwithstanding that such other
Collateral Instrument may be determined or be or become invalid or unenforceable
against any other person, whether or not the deficiency is known to the Security
Trustee or any of the Beneficiaries.
8.4 SEVERABILITY
Each of the provisions of this Deed is severable and distinct from one another
and if at any time one or more of such provisions is or becomes illegal, invalid
or unenforceable under any applicable law the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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<PAGE>
9. LAW AND JURISDICTION
9.1 GOVERNING LAW
This Deed is governed by and shall be construed in accordance with English law.
IN WITNESS whereof the parties to this Deed have caused this Deed to be duly
executed on the date first above written.
EXECUTED by
TELEWEST COMMUNICATIONS PLC
By:
.............................
Director
..............................
Director/Secretary
Signed for and on behalf of )
CIBC WOOD GUNDY PLC )
by: )
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SCHEDULE 8
EXISTING ENCUMBRANCES
PART I
COMPANY Encumbrance
A. Theseus No. 1 Limited (i) Partnership Interest Accession
Agreement dated 21st November,
1994 with The Toronto-Dominion
Bank relating to a Pledge and
Security Agreement dated 4
October, 1993 relating to a pledge
of partnership interest in Avon
Cable Limited Partnership or
London South Cable Partnership in
favour of The Toronto-Dominion
Bank.
(ii) Partnership Interest Accession
Agreement dated 21st November,
1994 with Canadian Imperial Bank
of Commerce relating to a Pledge
and Security Agreement dated 13
June, 1994 relating to a pledge of
partnership interest in Edinburgh
Cable Limited Partnership.
(iii) Deed of Adherence dated 21st
November, 1994 with The
Toronto-Dominion Bank.
(iv) Deed of Adherence dated 21st
November, 1994 with Canadian
Imperial Bank of Commerce.
(v) Deed of Subordination dated 21st
November, 1994 with The
Toronto-Dominion Bank.
(vi) Deed of Subordination dated 21st
November, 1994 with Canadian
Imperial Bank of Commerce.
B. Theseus No. 2 Limited (i) Partnership Interest Accession
Agreement dated 21st November,
1994 with The Toronto-Dominion
Bank relating to a Pledge and
Security Agreement dated 4
October, 1993 relating to a pledge
of partnership interest in Avon
Cable Limited Partnership or
London South Cable Partnership in
favour of The Toronto-Dominion
Bank.
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(ii) Partnership Interest Accession
Agreement dated 21st November,
1994 with Canadian Imperial Bank
of Commerce relating to a Pledge
and Security Agreement dated 13
June, 1994 relating to a pledge of
partnership interest in Edinburgh
Cable Limited Partnership.
(iii) Deed of Adherence dated 21st
November, 1994 with The
Toronto-Dominion Bank.
(iv) Deed of Adherence dated 21st
November, 1994 with Canadian
Imperial Bank of Commerce.
(v) Deed of Subordination dated 21st
November, 1994 with The
Toronto-Dominion Bank.
(vi) Deed of Subordination dated 21st
November, 1994 with Canadian
Imperial Bank of Commerce.
C. TeleWest Holdings Limited (i) Pledge over shares in TeleWest
Scotland Holdings Limited dated 23
May and 13 June 1994 in favour of
Canadian Imperial Bank of Commerce
assigned by TCI/US WEST Cable
Communications Inc. to TeleWest
Holdings Limited.
(ii) Assignation of share pledge dated
21st November, 1994 with Canadian
Imperial Bank of Commerce.
(iii) Mortgage of Shares dated 21st
November, 1994 with The
Toronto-Dominion Bank.
(iv) Deed of Subordination dated 21st
November, 1994 in favour of The
Toronto-Dominion Bank.
(v) Deed of Subordination dated 21st
November, 1994 in favour of
Canadian Imperial Bank of
Commerce.
D. United Artists
Communications (Nominees)
Limited (i) Mortgage of Shares dated 4th
October, 1993 with The
Toronto-Dominion Bank.
(ii) Charge over Shares dated 4
October, 1993 in United Artists
Communications (Avon) Limited in
favour of The Toronto-Dominion
Bank.
(iii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank.
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E. London South Cable (i) Debenture dated 4 October, 1993 in
Partnership favour of The Toronto-Dominion
Bank.
F. Avon Cable Limited
Partnership (i) Debenture dated 4 October, 1993 in
favour of The Toronto-Dominion
G. United Artists Bank.
Communications
(London South) Limited (i) Debenture dated 4 October, 1993 in
favour of The Toronto-Dominion
Bank.
(ii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank.
H. United Artists
Communications (i) Debenture dated 4 October, 1993 in
favour of Communications (Avon)
LimitedThe Toronto- Dominion Bank.
(ii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank.
I. TCI/US WEST Cable (i) Charge over Shares dated 4
October, 1993 in United Artists
Communications (Avon) Limited in
favour of The Toronto-Dominion
Bank.
(ii) Pledge and Security Agreement
dated 4 October, 1993 with The
Toronto-Dominion Bank.
(iii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Bank (as partner of Avon
Cable Limited Partnership).
(iv) Pledge and Security Agreement
dated 13 June, 1994 in favour of
Canadian Imperial Bank of
Commerce.
(v) Deed of Subordination dated 13
June, 1994 with Canadian Imperial
Bank of Commerce.
J. The Cable Equipment Store
Limited (i) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank. (ii)
Mortgage of Shares dated 4
October, 1993 with The
Toronto-Dominion Bank.
(iii) Deed of Subordination dated 13
June, 1994 with Canadian Imperial
Bank of Commerce.
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K. Avon Cable Investments
Limited (i) Pledge and Security Agreement
dated 4 October, 1993 with The
Toronto-Dominion Bank.
(ii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank (as partner
of Avon Cable Limited
Partnership).
(iii) Legal Mortgage dated 25 February,
1994 with The Toronto-Dominion
Bank.
(iv) Debenture dated 4 October, 1993
with The Toronto-Dominion Bank.
L. Crystal Palace Radio Limited (i) Pledge and Security Agreement
dated 4 October, 1993 with The
Toronto-Dominion Bank.
(ii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank (as partner
of London South Cable
Partnership).
(iii) Debenture dated 8 March, 1990 in
favour of The Toronto-Dominion
Bank.
(iv) Debenture dated 4 October, 1993 in
favour of The Toronto-Dominion
Bank.
(v) Mortgage of Shares dated 6 April,
1994 in favour of The
Toronto-Dominion Bank.
M. United Cable (London South)
Limited Partnership (i) Pledge and Security Agreement
dated 4 October 1993 with The
Toronto-Dominion Bank.
(ii) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank (as partner
of London South Cable
Partnership).
(iii) Mortgage of Shares dated 6 April,
1994 in favour of The
Toronto-Dominion Bank.
N. TeleWest Communications (i) Deed of Subordination dated 4
October, 1993 with The
Toronto-Dominion Bank.
(ii) Deed of Subordination dated 13
June, 1994 with Canadian Imperial
Bank of Commerce.
O. Edinburgh Cable Limited
Partnership (i) Guarantee and Debenture dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
P. TeleWest Scotland Holdings
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
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(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
(iii) Pledge over shares dated 21
September and 12 October 1994 in
Tayside Cable Systems Limited,
Kingdom Cablevision Limited,
Scotcable (Motherwell) Limited,
Scotcable (Cumbernauld) Limited,
Scotcable (Dumbarton) Limited,
Cable North (Forth District)
Limited in favour of Canadian
Imperial Bank of Commerce.
(iv) Pledge over shares dated 21
September and 12 October, 1994 in
United Artists Communications
(Scotland) Limited in favour of
Canadian Imperial Bank of
Commerce.
Q. Tayside Cable Systems (i) Debenture dated 13 June, 1994 in
Limited favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
(iii) Standard Security dated 13 June,
1994 and recorded 24 June, 1994 in
relation to the property at
Speygate/Canal Street, Perth.
(iv) Pledge of shares in Dundee Cable
and Satellite Limited and Perth
Cable Television Limited dated 23
May and 13 June, 1994 in favour of
Canadian Imperial Bank of
Commerce.
R. Kingdom Cablevision Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
S. Scotcable (Motherwell)
Limited (i) Debenture 13 June, 1994 in favour
of Canadian Imperial Bank of
Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
T. Dundee Cable and Satellite
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
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U. Perth Cable Television
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
V. Scotcable (Cumbernauld)
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
W. Scotcable (Dumbarton)
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
X. Cable North (Forth District)
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
Y. United Artists
Communications (i) Debenture dated 13 June, 1994 in
favour of (Scotland)
LimitedCanadian Imperial Bank of
Commerce. (ii) Bond and floating
charge dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(iii) Standard Securities dated 13 June,
1994 and recorded 24 June, 1994 in
relation to properties at 1 South
Gyle Crescent Lane, Edinburgh and
4 Bankhead Avenue, Glenrothes.
(iv) Pledge of shares in Capital City
Cablevision Limited, Edinburgh
Cablevision Limited and
Hieronymous Limited dated 23 May
and 13 June, 1994 in favour of
Canadian Imperial Bank of
Commerce.
Z. Capital City Cablevision
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
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AA. Edinburgh Cablevision
Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
AB. Hieronymous Limited (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce.
(ii) Bond and floating charge dated 13
June, 1994 in favour of Canadian
Imperial Bank of Commerce.
AC. Edinburgh Cable Limited
Partnership (i) Debenture dated 13 June, 1994 in
favour of Canadian Imperial Bank
of Commerce as partner of the
partnership created by the
Edinburgh Cable Joint Venture
Agreement.
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PART II
COMPANY/PARTNERSHIP ENCUMBRANCE
A. United Artists Communications
(South East) Limited (i) Mortgage of deposited moneys dated
21st January, 1994 with
Electricity Supply Nominees
Limited.
(ii) Deed of Variation and Further
Charge dated 26th June, 1995 with
Electricity Supply Nominees
Limited.
B. United Artists Communications
(Avon) Limited (i) Legal charge dated 9 October, 1991
in favour of Barclays Bank Plc
over Units 550 and 700 Aztec West,
Almondsbury.
C. United Artists Communications
(North East) Limited (i) Deed of Charge over Credit Balance
dated 3 March, 1993 in favour of
Barclays Bank Plc.
D. United Artists Communications
(London South) Limited (i) Mortgage dated 29 August, 1986 in
favour of Singer & Friedlander
Limited over Communications House,
Croydon.
(ii) Mortgage dated 23 March, 1992 in
favour of National Westminster
Bank Plc over Shannon Commercial
Centre, New Malden.
E. Avon Cable Partnership (i) Mortgage dated 4 October, 1993 in
favour of Barclays Bank Plc over
Unit 7 Hawkfield Business Park,
Whitchurch.
F. TeleWest Holdings Limited (i) Mortgage of Shares in Cable London
PLC dated 29 September, 1995 with
Canadian Imperial Bank of
Commerce.
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PART III
COMPANY/PARTNERSHIP ENCUMBRANCE
A. Scotcable (Motherwell) Limited Standard Security granted or to be
granted over premises at Bothwell
Park Industrial Estate, Uddingston
in favour of British Linen Bank
Limited
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SCHEDULE 9
PART A
THE AVON LICENCES
Telecommunications Act 1984 Licence:
<TABLE>
<CAPTION>
======================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Artists Avon 05.12.89
Communications (Avon)
Limited
======================================================================================================================
</TABLE>
Broadcasting Act 1990 - Local Delivery Licence:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists LDS005 Avon 16.10.91
Communications (Avon)
Limited
=========================================================================================================================
</TABLE>
PART B
THE COTSWOLDS LICENCES
Telecommunications Act 1984 Licence:
<TABLE>
<CAPTION>
==========================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Artists Communications Cheltenham and Gloucester 26.08.88
(Cotswolds) Limited
==========================================================================================================================
</TABLE>
Broadcasting Act 1990 - Local Delivery Licence:
<TABLE>
<CAPTION>
=============================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists Communications LDS009 Cheltenham and 16.10.91
(Cotswolds) Limited Gloucester
=============================================================================================================================
</TABLE>
149
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PART C
THE LONDON SOUTH LICENCES
Telecommunications Act 1984 Licence:
<TABLE>
<CAPTION>
======================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Artists Croydon 14.01.94
Communications (London Kingston and Richmond 08.05.90
South) Limited Merton and Sutton 23.01.90
======================================================================================================================
</TABLE>
Cable and Broadcasting Act 1984 - Prescribed Diffusion Service Licences:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists PDSL021 Merton and 15.03.90
Communications (London Sutton
South) Limited PDSL109 Kingston and 03.12.90
Richmond
=========================================================================================================================
</TABLE>
Broadcasting Act 1990 - Local Delivery Licence:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists LDS002 Croydon 16.10.91
Communications (London
South) Limited
=========================================================================================================================
</TABLE>
PART D
THE NORTH EAST LICENCES
Telecommunications Act 1984 Licence:
<TABLE>
<CAPTION>
===================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Artists Communications Tyneside 26.04.91
(North East) Partnership
===================================================================================================================
</TABLE>
150
<PAGE>
Cable and Broadcasting Act 1984 - Prescribed Diffusion Service Licence:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists PDSL 030 Tyneside 03.09.90
Communications
(North East) Limited
=========================================================================================================================
</TABLE>
PART E
THE SCOTLAND LICENCES
Telecommunications Act 1984 Licence:
<TABLE>
<CAPTION>
======================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
======================================================================================================================
<S> <C> <C>
United Artists Edinburgh 20.12.90
Communications (Scotland)
Limited
- ----------------------------------------------------------------------------------------------------------------------
Scotcable (Cumbernauld) Cumbernauld and Monklands 18.01.90
Limited
- ----------------------------------------------------------------------------------------------------------------------
Scotcable (Dumbarton) Dumbarton 18.01.90
Limited
- ----------------------------------------------------------------------------------------------------------------------
Tayside Cable Systems Dundee 17.01.91
Limited Perth 17.01.91
- ----------------------------------------------------------------------------------------------------------------------
Cable North (Forth District) Falkirk and Livingstone 11.11.90
Limited
- ----------------------------------------------------------------------------------------------------------------------
Kingdom Cablevision Glenrothes and Kirkcaldy 18.04.91
Limited
- ----------------------------------------------------------------------------------------------------------------------
Scotcable (Motherwell) Motherwell, Hamilton and 18.01.90
Limited East Kilbride
======================================================================================================================
</TABLE>
151
<PAGE>
Cable and Broadcasting Act 1984 - Prescribed Diffusion Service Licences:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Scotcable PDSL 115 Cumbernauld and 03.12.90
(Cumbernauld) Monkland
Limited
- -------------------------------------------------------------------------------------------------------------------------
Scotcable PDSL 117 Dumbarton 03.12.90
(Dumbarton) Limited
- -------------------------------------------------------------------------------------------------------------------------
Tayside Cable PDSL 069 Dundee 03.12.90
Systems Limited PDSL 113 Perth 03.12.90
- -------------------------------------------------------------------------------------------------------------------------
Cable North (Forth PDSL 101 Falkirk and 03.12.90
District) Limited Livingstone
- -------------------------------------------------------------------------------------------------------------------------
Kingdom Cablevision PDSL 064 Glenrothes and 03.12.90
Limited Kirkcaldy
- -------------------------------------------------------------------------------------------------------------------------
Scotcable PDSL 116 Motherwell, 03.12.90
(Motherwell) Limited Hamilton and East
Kilbride
=========================================================================================================================
</TABLE>
Broadcasting Act 1990 - Local Delivery Licence:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists LDS 008 Edinburgh 16.10.91
Communications (Scotland)
Limited
=========================================================================================================================
</TABLE>
152
<PAGE>
PART F
THE SOUTH EAST LICENCES
Telecommunications Act 1984 Licences:
<TABLE>
<CAPTION>
===================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
United Artists Communications Basildon, Brentwood and 14.11.90
(North Thames Estuary) Chelmsford
Limited
- -------------------------------------------------------------------------------------------------------------------
United Artists Communications Chatham, Gillingham, 30.11.90
(South Thames Estuary) Limited Gravesend, Maidstone,
Northfleet, Rochester and
Sittingbourne
===================================================================================================================
</TABLE>
Broadcasting Act 1990 - Local Delivery Licences:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
United Artists LDS006 Basildon, Brentwood 16.10.91
Communications and Chelmsford
(North Thames
Estuary) Limited
- -------------------------------------------------------------------------------------------------------------------------
United Artists LDS007 Chatham, 16.10.91
Communications Gillingham,
(South Thames Gravesend,
Estuary) Limited Maidstone,
Northfleet, Rochester
and Sittingbourne
=========================================================================================================================
</TABLE>
153
<PAGE>
PART G
THE SBCC LICENCES
Telecommunications Act 1984 Licences:
<TABLE>
<CAPTION>
===================================================================================================================
LICENCE HOLDER LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cable Communications Merseyside 14.10.89
Liverpool Limited
- -------------------------------------------------------------------------------------------------------------------
Cable Communications North Liverpool and Sefton 30.11.90
Liverpool Limited
- -------------------------------------------------------------------------------------------------------------------
Cable Communications St. St. Helens and Knowsley 08.12.90
Helens & Knowsley Limited
- -------------------------------------------------------------------------------------------------------------------
Cable Communications Wigan Wigan 14.11.90
Limited
- -------------------------------------------------------------------------------------------------------------------
Cable Communications (Central Central Lancashire 14.10.89
Lancashire) Limited
- -------------------------------------------------------------------------------------------------------------------
Telford Communications Telford 12.04.91
Limited
- -------------------------------------------------------------------------------------------------------------------
Midlands Cable Black Country 25.01.91
Communications Limited
===================================================================================================================
</TABLE>
154
<PAGE>
Cable and Broadcasting Act 1984 - Prescribed Diffusion Service Licences:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cable PDSL 007 Merseyside 14.09.84
Communications
Liverpool Limited
- -------------------------------------------------------------------------------------------------------------------------
Cable PDSL 077 North Liverpool and 03.12.90
Communications Sefton
Liverpool Limited
- -------------------------------------------------------------------------------------------------------------------------
Cable PDSL 076 St. Helens and 03.12.90
Communications St. Knowsley
Helens & Knowsley
Limited
- -------------------------------------------------------------------------------------------------------------------------
Cable PDSL 105 Wigan 03.12.90
Communications
Wigan Limited
- -------------------------------------------------------------------------------------------------------------------------
Cable PDSL 016 Central Lancashire 17.10.89
Communications
(Central Lancashire)
Limited
- -------------------------------------------------------------------------------------------------------------------------
Telford PDSL 132 Telford 03.12.90
Telecommunications
Limited
- -------------------------------------------------------------------------------------------------------------------------
Midlands Cable PSDL 131 Black Country 03.12.90
Communications
Limited
=========================================================================================================================
</TABLE>
Broadcasting Act 1990 - Local Delivery Licence:
<TABLE>
<CAPTION>
=========================================================================================================================
LICENCE HOLDER LICENCE NO. LICENCE AREA DATE OF GRANT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cable LDS 011 Fylde and Wyre 16.12.94
Communications
Fylde & Wyre
Limited
=========================================================================================================================
</TABLE>
155
<PAGE>
SCHEDULE 10
PRINCIPAL AGREEMENTS
PART A
BT INTERCONNECT AGREEMENTS
(i) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (London South) plc and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995, relating to the
Croydon franchise area;
(ii) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (London South) plc and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995, relating to the
Merton and Sutton franchise areas;
(ii) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (London South) plc and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995, relating to the
Kingston and Richmond franchise areas;
(iv) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (Cotswolds) Limited and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995;
(v) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (Avon) Limited and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995;
(vi) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (North East) Limited and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995;
(vii) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (North Thames Estuary) Limited and
British Telecommunications Plc as amended by supplemental agreements
dated 26 May 1994, 19 January 1995 and about 17 July 1995;
(viii) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (South Thames Estuary) Limited and
British Telecommunications Plc as
156
<PAGE>
amended by supplemental agreements dated 26 May 1994, 19 January
1995 and about 17 July 1995;
(ix) Interconnect letter agreement dated 17 December 1993 made between
United Artists Communications (Scotland) Limited and British
Telecommunications Plc as amended by supplemental agreements dated
26 May 1994, 19 January 1995 and about 17 July 1995;
(x) Interconnect letter agreement dated 17 December 1993 made between
Scotcable (Motherwell) Limited and British Telecommunications Plc as
amended by supplemental agreements dated 26 May 1994, 19 January
1995 and about 17 July 1995;
(xi) Interconnect letter agreement dated 17 December 1993 made between
Scotcable (Cumbernauld) Limited and British Telecommunications Plc
as amended by supplemental agreements dated 26 May 1994, 19 January
1995 and about 17 July 1995;
(xii) Interconnect letter agreement dated 17 December 1993 made between
Scotcable (Dumbarton) Limited and British Telecommunications Plc as
amended by supplemental agreements dated 26 May 1994, 19 January
1995 and about 17 July 1995;
(xiii) Interconnect letter agreement dated 17 December 1993 made between
Tayside Cable Systems Limited and British Telecommunications Plc as
amended by supplemental agreements dated 26 May 1994, 19 January
1995 about 17 July 1995, relating to the Dundee, Broughty Ferry,
Tayside, Monifieth and Carnoustie franchises;
(xiv) Interconnect letter agreement dated 17 December 1993 made between
Tayside Cable Systems Limited and British Telecommunications Plc as
amended by supplemental agreements dated 26 May 1994, 19 January
1995 and about 17 July 1995, relating to the Perth franchise area;
(xv) Interconnect letter agreement dated 17 December 1993 made between
Kingdom Cablevision Limited and British Telecommunications Plc as
amended by supplemental agreements dated 26 May 1994, 19 January
1995 and about 17 July 1995;
(xvi) Interconnect letter agreement dated 17 December 1993 made between
Cable North (Forth District) Limited and British Telecommunications
Plc as amended by supplemental agreements dated 26 May 1994, 19
January 1995 and about 17 July 1995;
(xvii) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Cable Communications St Helens and
Knowsley Limited as amended by supplemental agreements dated 23 May
1994, 31 March 1995 and during July 1995;
(xviii) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Cable Communications (Liverpool) Limited
as amended by supplemental
157
<PAGE>
agreements dated 23 May 1994, 31 March 1995 and about 17 July 1995
relating to the North Liverpool franchise;
(xix) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Cable Communications (Liverpool) Limited
as amended by supplemental agreements dated 23 May 1994, 31 March
1995 and during July 1995 relating to the South Liverpool franchise;
(xx) Multiple Systems Operator Agreement dated 23 December 1993 between
British Telecommunications Plc and SBC CableComms (UK) Limited.
(xxi) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Midlands Cable Communications Limited as
amended by supplemental agreements dated 23 May 1994, 31 March 1995
and during July 1995;
(xxii) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Telford Telecommunications Limited as
amended by supplemental agreements dated 23 May 1994, 31 March 1995
and during July 1995;
(xxiii) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Cable Communications (Wigan) Limited as
amended by supplemental agreements dated 23 May 1994, 31 March 1995
and during July 1995;
(xxiv) Interconnect agreement dated 23 December 1993 made between British
Telecommunications Plc and Cable Communications (Central Lancashire)
Limited as amended by supplemental agreements dated 23 May 1994, 31
March 1995 and during July 1995;
PART B
SKY STANDARD CABLE OPERATOR AGREEMENTS
(i) Standard Cable Operator Agreement dated 25 February 1993 made
between Sky Television Plc, British Sky Broadcasting Limited,
TeleWest Communications Group Limited and certain other companies
party thereto;
(ii) Standard Cable Operator Agreement dated 30 April 1995 made between
British Sky Broadcasting Limited, British Sky Broadcasting Group
Plc, TeleWest Communications plc and the other companies party
thereto as amended by all or any of the following:
(a) letter from TeleWest to BSkyB dated 27 June 1995,
(b) letter to British Sky Broadcasting Limited and British Sky
Broadcasting Group Plc from TeleWest Communications plc
dated 25 May 1995, and
158
<PAGE>
(c) undated letter from British Sky Broadcasting Limited and
British Sky Broadcasting Group Plc to TeleWest
Communications Plc; and
(iii) Unsigned/undated agreement between British Sky Broadcasting Limited,
Sky Television Limited, SBC Cablecomms UK and certain other
companies party thereto.
159
<PAGE>
THE BORROWER
SIGNED for and on behalf of )
TELEWEST COMMUNICATIONS ) STEPHEN DAVIDSON
NETWORKS LIMITED )
THE ORIGINAL CHARGING SUBSIDIARIES
SIGNED for and on behalf of each of
TELEWEST COMMUNICATIONS GROUP LIMITED
TELEWEST COMMUNICATIONS CABLE LIMITED
TELEWEST HOLDINGS LIMITED
TELEWEST PARLIAMENTARY HOLDINGS LIMITED
THESEUS NO. 1 LIMITED
THESEUS NO. 2 LIMITED
THE CABLE EQUIPMENT STORE LIMITED
UNITED ARTISTS COMMUNICATIONS (COTSWOLDS) LIMITED
UNITED ARTISTS COMMUNICATIONS (NOMINEES) LIMITED
UNITED ARTISTS COMMUNICATIONS (NORTH EAST) LIMITED
UNITED ARTISTS COMMUNICATIONS (SOUTH EAST) LIMITED
UNITED ARTISTS COMMUNICATIONS (SOUTH THAMES ESTUARY) LIMITED
UNITED ARTISTS COMMUNICATIONS (TYNESIDE) LIMITED
SBC CABLECOMMS (UK) LIMITED
SOUTHWESTERN BELL INTERNATIONAL HOLDINGS LIMITED
MIDLANDS CABLE COMMUNICATIONS LIMITED
TELFORD TELECOMMUNICATIONS LIMITED
NORTHWEST CABLE COMMUNICATIONS LIMITED
CABLE COMMUNICATIONS WIGAN LIMITED
CABLE COMMUNICATIONS (CENTRAL LANCASHIRE) LIMITED
CABLE COMMUNICATIONS LIVERPOOL LIMITED
CABLE COMMUNICATIONS (ST. HELENS & KNOWSLEY) LIMITED
TELEWEST (MOTHERWELL) LIMITED
UNITED ARTISTS COMMUNICATIONS (LONDON SOUTH) LIMITED
UNITED ARTISTS COMMUNICATIONS (AVON) LIMITED
TAYSIDE CABLE SYSTEMS LIMITED
KINGDOM CABLEVISION LIMITED
SCOTCABLE (MOTHERWELL) LIMITED
SCOTCABLE (CUMBERNAULD) LIMITED
SCOTCABLE (DUMBARTON) LIMITED
CABLE NORTH (FORTH DISTRICT) LIMITED
UNITED ARTISTS COMMUNICATIONS (SCOTLAND) LIMITED
TELEWEST SCOTLAND HOLDINGS LIMITED
TELEWEST COMMUNICATIONS (INTERNET) LIMITED
160
<PAGE>
TELEWEST SOUTHPORT LIMITED
CRYSTAL PALACE RADIO LIMITED
AVON CABLE INVESTMENTS LIMITED
TELEWEST (WORCESTER) LIMITED
by: STEPHEN DAVIDSON
161
<PAGE>
THE ORIGINAL CHARGING PARTNERSHIPS
SIGNED for and on behalf of each of
COTSWOLDS CABLE LIMITED PARTNERSHIP
ESTUARIES CABLE LIMITED PARTNERSHIP
TYNESIDE CABLE LIMITED PARTNERSHIP
EDINBURGH CABLE LIMITED PARTNERSHIP
AVON CABLE LIMITED PARTNERSHIP
UNITED CABLE (LONDON SOUTH) LIMITED PARTNERSHIP
TCI/US WEST CABLE COMMUNICATIONS GROUP
by their general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by their general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
LONDON SOUTH CABLE PARTNERSHIP
by its managing partner
UNITED CABLE (LONDON SOUTH) LIMITED PARTNERSHIP
by its general partner
THESEUS NO.1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO.2 LIMITED: STEPHEN DAVIDSON
162
<PAGE>
SIGNED for and on behalf of the partners of
UNITED ARTISTS COMMUNICATIONS
(SOUTH EAST) PARTNERSHIP
by the following:
Signed for and on behalf of
ESTUARIES CABLE LIMITED PARTNERSHIP
by its general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
Signed by
UNITED ARTISTS COMMUNICATIONS
(SOUTH EAST) LIMITED: STEPHEN DAVIDSON
Signed by
UNITED ARTISTS COMMUNICATIONS
(SOUTH THAMES ESTUARY) LIMITED: STEPHEN DAVIDSON
SIGNED for and on behalf of the partners of
UNITED ARTISTS COMMUNICATIONS
(NORTH EAST) PARTNERSHIP
by the following:
Signed for and on behalf of
TYNESIDE CABLE LIMITED PARTNERSHIP
by its general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
Signed by
UNITED ARTISTS COMMUNICATIONS
(NORTH EAST) LIMITED: STEPHEN DAVIDSON
163
<PAGE>
Signed by
UNITED ARTISTS COMMUNICATIONS
(TYNESIDE) LIMITED: STEPHEN DAVIDSON
SIGNED for and on behalf of the partners of
AVON CABLE JOINT VENTURE
by the following:
Signed for and on behalf of
AVON CABLE LIMITED PARTNERSHIP
by its general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
Signed by
UNITED ARTISTS COMMUNICATIONS
(AVON) LIMITED: STEPHEN DAVIDSON
SIGNED for and on behalf of the partners of
LONDON SOUTH JOINT VENTURE
by the following:
Signed for and on behalf of LONDON SOUTH CABLE PARTNERSHIP by its
managing partner UNITED CABLE (LONDON SOUTH) LIMITED PARTNERSHIP by its
general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
164
<PAGE>
Signed for and on behalf of
UNITED ARTISTS COMMUNICATIONS
(LONDON SOUTH) LIMITED: STEPHEN DAVIDSON
SIGNED for and on behalf of the partners of
UNITED ARTISTS COMMUNICATIONS
(COTSWOLDS) VENTURE
by the following:
Signed for and on behalf of
COTSWOLDS CABLE LIMITED PARTNERSHIP
by its general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
Signed by
UNITED ARTISTS COMMUNICATIONS
(COTSWOLDS) LIMITED: STEPHEN DAVIDSON
SIGNED for and on behalf of
UNITED ARTISTS COMMUNICATIONS
(SCOTLAND) VENTURE
by the following:
Signed by
EDINBURGH CABLE LIMITED PARTNERSHIP
by its general partner
THESEUS NO. 1 LIMITED: STEPHEN DAVIDSON
and by its general partner
THESEUS NO. 2 LIMITED: STEPHEN DAVIDSON
165
<PAGE>
Signed for and on behalf of
UNITED ARTISTS COMMUNICATIONS
(SCOTLAND) LIMITED: STEPHEN DAVIDSON
THE ARRANGERS
SIGNED for and on behalf of
THE BANK OF NEW YORK
by:
JAMES LEE
attorney-in-fact
SIGNED for and on behalf of
CIBC WOOD GUNDY PLC
by:
NINA TRIANTIS
SIGNED for and on behalf of
CHASE INVESTMENT BANK LIMITED
by:
CHERYL BOUCHER
SIGNED for and on behalf of
NATWEST MARKETS
by:
PHILIP G. WALKER
SIGNED for and on behalf of
THE TORONTO-DOMINION BANK
by:
HOWARD BAKER
166
<PAGE>
THE BANKS AND FINANCIAL INSTITUTIONS
SIGNED for and on behalf of
THE BANK OF NEW YORK, COMPANY INC.
by:
JAMES LEE
attorney-in-fact
SIGNED for and on behalf of
CANADIAN IMPERIAL BANK
OF COMMERCE
by:
NINA TRIANTIS
SIGNED for and on behalf of
CHEMICAL BANK
by:
CHERYL BOUCHER
SIGNED for and on behalf of
NATIONAL WESTMINSTER
BANK PLC
by:
PHILIP G. WALKER
SIGNED for and on behalf of
THE TORONTO-DOMINION BANK
by:
HOWARD BAKER
167
<PAGE>
THE AGENT
SIGNED for and on behalf of
CIBC WOOD GUNDY PLC
by:
NINA TRIANTIS
THE SECURITY TRUSTEE
SIGNED for and on behalf of
CIBC WOOD GUNDY PLC
by:
NINA TRIANTIS
168
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial
information extracted from the financial
statements contained in the body of the
accompanying Form 10-Q and is qualified in its
entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<CURRENCY> POUNDS STERLING
<EXCHANGE-RATE> 1.5529
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 224,382
<SECURITIES> 0
<RECEIVABLES> 57,122
<ALLOWANCES> 5,427
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,470,521
<DEPRECIATION> 235,935
<TOTAL-ASSETS> 2,206,068
<CURRENT-LIABILITIES> 0
<BONDS> 825,043
0
49,607
<COMMON> 92,701
<OTHER-SE> 1,019,928
<TOTAL-LIABILITY-AND-EQUITY> 2,206,068
<SALES> 0
<TOTAL-REVENUES> 133,480
<CGS> 0
<TOTAL-COSTS> 56,077
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,272
<INCOME-PRETAX> (170,638)
<INCOME-TAX> 89
<INCOME-CONTINUING> (170,727)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170,727)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99
Telewest Communications plc Press Release issued on August 5, 1996 with respect
to results of operations for the six month period ended June 30, 1996 (including
unaudited consolidated financial statements prepared in accordance with UK
GAAP).
<PAGE>
T E L E W E S T
PRESS RELEASE COMMUNICATIONS
================================================================================
FOR IMMEDIATE RELEASE 5 August 1996
TELEWEST COMMUNICATIONS PLC
INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 1996
Telewest Communications plc ("Telewest") today announced its unaudited financial
results for the six months ended 30 June 1996.
Pro forma information is included to demonstrate the comparative effect of
including the results of SBC CableComms UK ("SBCC"), acquired by Telewest on 3
October 1995, for the equivalent period last year.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
ACTUAL PRO FORMA
Year on Year Year on Year
<S> <C> <C> <C>
TOTAL REVENUE 2nd Qtr up 136% to(pound)68. 3m up 58%
YTD up 141% to(pound)133.5m up 59%
CABLE TELEVISION REVENUE 2nd Qtr up 115% to(pound)28.8m up 46%
YTD up 120% to(pound)56.9m up 48%
RESIDENTIAL TELEPHONY REVENUE 2nd Qtr up 177% to(pound)29.3m up 64%
YTD up 184% to(pound)57.3m up 66%
BUSINESS TELEPHONY REVENUE 2nd Qtr up 120% to(pound)8.1m up 84%
YTD up 113% to(pound)15.2m up 74%
Gross contribution 2nd Qtr up 114% to(pound)39.8m up 49%
(total revenue less direct YTD up 128% to(pound)77.4m up 55%
programming and telephony costs)
EBITDA (Loss) 2nd Qtr improved 55% to(pound)3.3m improved 64%
(Loss before interest, tax, YTD improved 42% to(pound)7.1m improved 55%
depreciation and amortisation)
Net loss 2nd Qtr up 208% to(pound)64.2m
YTD up 205% to(pound)117.7m
Capital expenditure 2nd Qtr up 114% to (pound)134.1m
YTD up 83% to (pound)230.2m
<PAGE>
<CAPTION>
OPERATING HIGHLIGHTS
ACTUAL PRO FORMA
Year on Year Year on Year
<S> <C> <C>
CABLE TELEVISION CUSTOMERS
- OWNED AND OPERATED up 107% to 426,010 up 31%
- EQUITY BASIS up 91% to 487,079 up 30%
Cable television penetration stable at 21.1% (21.2% Q2 1995 and 21.0% pro forma
Q2 1995 )
Rolling 12 month churn+ down to 36.4% (See note below)
Residential telephony lines
- Owned and operated up 184% to 501,778 up 54%
- Equity basis up 156% to 558,303 up 52%
Residential telephony penetration increased to 26.4% (22.8% Q2 1995 and 25.1%
pro forma Q2 1995 )
Rolling 12 month churn+ up to 20.2% (See note below)
Business telephony lines
- Owned and operated up 142% to 51,872 up 83%
- Equity basis up 118% to 60,939 up 75%
</TABLE>
Commenting on the results, Stephen Davidson, Acting Chief Executive Officer of
Telewest, said:
"Operating conditions in the Second Quarter have seen strong competition from
terrestrial television, due to the quantity of sport being broadcast, and an
aggressive marketing campaign from British Telecom. Despite this we achieved
further steady growth across all our customers, lines and revenues and have now
passed 2.2 million homes, 57% of our network. I am pleased to note that we have
over half a million residential telephone lines in operation.
"On 1 July 1996 we re-branded our franchises under the name Telewest
Communications. We continue to add customer value through the progressive
introduction of new services, such as Cable Internet and the Sega Channel, and
the improvement of our customer services. The second half of the year will see a
greater emphasis on marketing as we package our cable television and cable
telephony services across all our franchises and further strengthen our
competitive pricing position. I am confident that we will benefit from the
prospects for number portability which we start rolling out in September.
"We believe we are now fully funded following the signing of a (pound)1.2
billion banking facility. The increase in our net loss is in line with
expectations and we remain on course to go operating cash flow positive during
this year."
ENQUIRIES TO:
TELEWEST COMMUNICATIONS
Stephen Davidson, Acting Chief Executive Officer Tel: 01483 750900
DEWE ROGERSON
Anthony Carlisle Tel: 0171 638 9571
John Antcliffe
+ In calculating churn rates "transfers" are now excluded as explained below on
page 4.
2
<PAGE>
Note: All comparatives given in the text below are on a pro forma basis
including SBCC's results as if Telewest had acquired SBCC on 1 January 1995.
OPERATIONAL REVIEW
The build programme continued at a rapid pace with another 126,181 homes being
activated in the Second Quarter. Telewest has now passed 2.2 million homes,
increasing the build out to 57%. The build programme is expected to quicken in
the second half of the year with a year end target of 64%.
As Telewest's build out moves further beyond the 50% level, the company is
increasing its focus on marketing and customer service and has been involved in
a number of intensive marketing campaigns. The Cable Communications
Association's national "Get Connected" campaign has been successful in raising
awareness, particularly amongst the younger audiences, which Telewest believes
promises well for the future. In addition, Telewest has undertaken a number of
campaigns in its own franchises emphasising the benefits of particular cable
products.
As of 1 July 1996, Telewest re-branded all its franchises, which previously
traded as United Artists, Cable Midlands and Cable North West, under the name
Telewest Communications. This is the start of the development of Telewest
Communications as a national brand. In addition, Telewest recently announced a
restructuring of its telephony price tariffs to undercut British Telecom by
10-15% on all calls* from 15 July 1996. Number portability is due to be
introduced in the first franchise in September with the roll out completed
across all the franchises by early 1997. Various new products such as the Sega
Channel and Cable Internet have been launched, with trialling of high speed
broadband cable modems starting this year.
Telewest is also concentrating on improving levels of customer service across
the board and has recruited additional staff in customer facing activities.
REGULATORY UPDATE
OFTEL published its price control proposals for British Telecom for the period
to 1997 to 2001 on 3 June 1996. It was proposed that the increase in local,
national and international call charges should be capped at RPI-4.5% for the
majority of residential customers. This is comfortably in line with
Telewest's expectations. Overall, Telewest welcomes the move recognising the
balance created by OFTEL between protecting customer interests, the legitimate
business interests of all competitors and the increasing role played by
competition.
FINANCIAL REVIEW
The first half of 1996 has continued the trends established at the end of 1995.
At the end of the Second Quarter the total number of customers/lines had grown
by 44.3% year on year to 979,660 whilst the Second Quarter revenue growth was
even higher at 57.6% year on year.
The EBITDA loss for the Second Quarter was down 10.5% on the First Quarter of
1996 at (pound)3.3 million bringing the EBITDA loss for the year to date to
(pound)7.1m. This is an improvement of 55% on the same period last year. The net
loss for the year to date was in line with expectations at (pound)117.7 million.
On 22 May 1996, Telewest signed a (pound)1.2 billion financing agreement. This
constitutes the last stage in the financing plan following Telewest's successful
(pound)734 million bond issue in October 1995. Telewest believes it is now fully
funded to complete the build out of its network and to finance continuing
operations.
_______________
* Compared with BT's standard rates and discount schemes (including "Friends and
Family", "Premierline" and "Option 15" but excluding one-off deals by BT such as
"Surprise Special" and "Light User Rebate Scheme") as at 1 July 1996.
3
<PAGE>
CABLE TELEVISION The Second Quarter of 1996 has seen cable television customers
increase 31% on the same period last year whilst revenue increased 46.3% year on
year to (pound)28.8 million. This brings the revenue for the year to date to
(pound)56.9 million, an increase of 48% on the same period last year. This is
partly due to the increase in the pay to basic ratio from 174.9% in the Second
Quarter 1995 to 188.7% in the Second Quarter 1996. However the contribution for
the quarter from cable television increased only 33.7% year on year as Telewest
has increased the quantity of programmes in the basic package, adding channels
such as European Business News and the Sci-Fi channel. Average revenue per
customer increased 10.4% compared to the same period last year. Penetration was
stable at 21.1% whilst rolling twelve month churn+ was down at 36.4%. These
results are encouraging given the strong offering of sport on terrestrial
television in the quarter. The reduction in churn is a reflection of Telewest's
continuing improvements in customer service and the improved quality of its
sales processes.
RESIDENTIAL TELEPHONY
Over 500,000 residential telephone lines are now in operation, an increase of
54.3% on the same period last year. Revenue growth for the quarter again
outstripped customer growth increasing 63.7% to (pound)29.3 million bringing the
revenue for the first half to (pound)57.3 million, an increase of 66% on the
same period last year. Penetration was up year on year at 26.4% with rolling 12
month churn+ at 20.2%.
BUSINESS TELEPHONY
Business telephony again performed strongly with the number of business lines
jumping 82.8% year on year to 51,872 with Second Quarter revenues increasing
even faster, growing 83.6% year on year to (pound)8.1 million. The revenue for
the year to date stands at (pound)15.2 million, an improvement of 74% on the
first half of 1995.
The total contribution from both Residential and Business Telephony for the
Second Quarter increased 59.1% year on year to (pound)24.3 million.
+CHURN
In previous quarters Telewest has calculated churn by including in the total of
those who disconnect within the period those who move premises and reconnect
elsewhere. Whilst this has had no effect on the calculation of penetration,
which is based on period end figures, it has meant that the churn figures have
been overstated. In common with other companies within the cable industry,
Telewest is moving to stating its churn figures excluding those customers who
transfer (customers who move their cable television/residential telephony
service from one premise to another within a Telewest franchise). Unfortunately
it is not possible to rebase the figures for 1995 on the same basis and so no
comparatives are given in the Operating Highlights.
For the purposes of comparision, the 1996 and 1995 figures calculated on the old
basis (i.e. including in churn those who transfer their services and therefore
remain customers) are as follows. For cable television, the rolling twelve
month churn has decreased to 39.5% in Second Quarter 1996 from 50.5% in Second
Quarter 1995 (45.7% excluding SBCC) and for residential telephony the rolling
twelve month churn rate has increased to 23.3% in Second Quarter 1996 from 20.7%
in Second Quarter 1995 (20.7% excluding SBCC).
OPERATING COSTS AND EXPENSES
Selling, general and administration costs as a percentage of revenue in the
second quarter decreased 19.4 percentage points over the same quarter last year.
For the year to date SG&A as a percentage of revenue is down 15.1 percentage
points on the same period in 1995. This is due to higher customer acquisition
costs, as Telewest increases its marketing expenditure, being more than offset
by reductions in support costs, as Telewest exploits the efficiency gains of its
enlarged operations to improve customer service at a lower cost.
4
<PAGE>
AFFILIATED COMPANIES
Telewest's share of the net losses of its Affiliated Companies accounted for
under the equity method, principally Birmingham Cable Corporation Limited and
Cable London plc, was (pound)5.6 million and (pound)7.5 million for the first
six months of 1995 and 1996, respectively. The performance of the Affiliated
Companies was broadly in line with expectations.
LIQUIDITY AND CAPITAL RESOURCES
On 22 May 1996, Telewest entered into a (pound)1.2 billion senior secured credit
facility with a syndicate of banks ("the Senior Secured Facility"). The Senior
Secured Facility will, subject to satisfaction of certain conditions, be used to
finance the capital expenditure, working capital requirements, and other
permitted related activities for the construction and operation of all
Telewest's owned and operated franchises; to pay cash interest on Telewest's
unsecured debentures; to fund the repayment of existing secured borrowings in
respect of the London South, Avon and Scotland Regional Franchise Areas; to fund
loans to or investments in affliated companies; to fund the acquisition, and
subsequent construction, of local delivery operators/franchises and to refinance
advances and the payment of interest, fees and expenses in respect of the Senior
Secured Facility.
On 3 October 1995, Telewest raised (pound)734 million through the issue of $300
million principal amount of 9 5/8% Senior Debenture due 2006 and $1,536 million
principal amount at maturity of 11% Senior Discount Debentures due 2007. The
aggregate cost of the curency hedge arrangements associated with the debentures
was (pound)88 million.
Cash and deposit balances at 30 June 1996 were (pound)224 million.
Telewest currently expects that the anticipated funding requirements (after
taking into account current cash and deposit balances, together with anticipated
revenues) to substantially complete the construction of the owned and operated
network (including the recently aquired franchises of Worcester and Southport),
to fund the Company's operations, to upgrade older portions of the network, to
develop and introduce certain new products and to pay interest on Telewest's
debt will be approximately (pound)1 billion. Telewest expects such funding to be
provided by the Senior Secured Facility although there can be no assurance that
Telewest will not elect to use alternative funding sources or that Telewest's
current anticipated funding requirements will be in line with expectations.
__________________
The following is included in connection with new legislation recently introduced
in the United States of America. Safe Harbour Statement under the US Private
Securities Litigation Reform Act of 1995. The foregoing includes certain forward
looking statements that involve various risks and uncertainties which could lead
to actual results significantly different than those anticipated by Telewest.
5
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
OPERATING STATISTICS - OWNED AND OPERATED ON AN EQUITY BASIS
2ND QUARTER NET ADDITIONS
ACTUAL* ACTUAL* PRO FORMA* PRO FORMA*
NET ADDITIONS NET ADDITIONS NET ADDITIONS NET ADDITIONS NET ADDITIONS NET ADDITIONS
Q2 1996 YEAR TO DATE 1996 Q2 1995 YEAR TO DATE 1995 Q2 1995 YEAR TO DATE 1995
------------- ------------------ --------------- ------------------ -------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
CABLE TELEVISION
- ----------------
HOMES MARKETED 116,030 190,165 92,083 168,531 135,704 249,271
CATV CUSTOMERS 14,172 24,541 13,962 26,922 18,637 29,335
RESIDENTIAL TELEPHONY
- ---------------------
HOMES MARKETED 144,654 234,682 111,355 191,727 174,003 303,764
RESIDENTIAL TELEPHONY CUSTOMERS 33,485 69,241 24,564 47,783 44,768 86,719
RESIDENTIAL TELEPHONY LINES 34,742 70,862 24,652 48,047 44,855 86,983
BUSINESS TELEPHONY
- ------------------
BUSINESS TELEPHONY CUSTOMERS 1,619 3,140 1,042 1,825 1,705 2,953
BUSINESS TELEPHONY LINES 6,299 11,851 3,401 5,917 4,871 8,323
<CAPTION>
ACTUAL* PRO FORMA*
AS AT 30 JUNE AS AT 30 JUNE AS AT 30 JUNE
1996 1995 1995
---------------- ----------------------- --------------------------
<S> <C> <C> <C>
CABLE TELEVISION
- ----------------
HOMES MARKETED 2,021,623 974,006 1,548,274
CATV CUSTOMERS 426,010 206,018 325,360
CATV PENETRATION 21.1% 21.2% 21.0%
QUARTERLY CHURN RATE (ANNUALISED)** 35.3% 48.4% 48.3%
ROLLING 12 MONTH CHURN RATE** 36.4% 45.7% 50.5%
RESIDENTIAL TELEPHONY
- ---------------------
HOMES MARKETED 1,887,286 772,435 1,291,817
RESIDENTIAL TELEPHONY CUSTOMERS 498,646 175,932 324,437
RESIDENTIAL TELEPHONY PENETRATION 26.4% 22.8% 25.1%
RESIDENTIAL TELEPHONY LINES 501,778 176,577 325,082
QUARTERLY CHURN RATE PER LINE (ANNUALISED)** 20.6% 23.4% 21.3%
ROLLING 12 MONTH CHURN RATE** 20.2% 20.7% 20.7%
BUSINESS TELEPHONY
- ------------------
BUSINESS TELEPHONY CUSTOMERS 17,365 6,907 10,959
BUSINESS TELEPHONY LINES 51,872 21,477 28,373
AVERAGE NUMBER OF LINES PER CUSTOMER 3.0 3.1 2.6
QUARTERLY CHURN RATE PER LINE (ANNUALISED) 13.3% 13.7% 15.4%
ROLLING 12 MONTH CHURN RATE 12.5% 13.5% 16.6%
<FN>
NOTES: * ACTUAL REFERS TO COMPARATIVE FIGURES FOR THE GROUP AS CONSTITUTED
DURING THE FIRST SIX MONTHS OF 1995 (EXCLUDING THE RESULTS OF THE
FORMER SBCC FRANCHISES). PRO FORMA REFERS TO COMPARATIVE FIGURES FOR
THE GROUP DURING THE FIRST SIX MONTHS OF 1995 INCLUDING THE RESULTS
OF THE FORMER SBCC FRANCHISES.
** THE CALCULATION OF THE QUARTERLY CHURN RATE AND THE ROLLING TWELVE
MONTH CHURN RATE AT 30 JUNE 1996 HAS BEEN MODIFIED FROM THE
CALUCLATION AT 30 JUNE 1995 TO EXCLUDE THE EFFECT OF TRANSFERS (THOSE
PEOPLE WHO MOVE PREMISES AND TAKE THEIR CABLE TELEVISION AND
RESIDENTIAL TELEPHONY SERVICES WITH THEM). THE EFFECT OF THIS IS TO
REDUCE THE RATES FROM 39.1% AND 39.5% FOR CABLE TELEVISION, AND FROM
24.4% AND 23.3% FOR RESIDENTIAL TELEPHONY RESPECTIVELY.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
OPERATING STATISTICS - OWNED AND OPERATED AND AFFILIATED FRANCHISES ** ON AN EQUITY BASIS
2ND QUARTER NET ADDITIONS
ACTUAL* ACTUAL* PRO FORMA* PRO FORMA*
NET ADDITIONS NET ADDITIONS NET ADDITIONS NET ADDITIONS NET ADDITIONS NET ADDITIONS
Q2 1996 YEAR TO DATE 1996 Q2 1995 YEAR TO DATE 1995 Q2 1995 YEAR TO DATE 1995
-------------- ------------------ -------------- ------------------ -------------------------------
<S> <C> <C> <C> <C> <C> <C>
CABLE TELEVISION
- ----------------
HOMES MARKETED 129,502 209,139 106,578 193,335 150,199 274,075
CATV CUSTOMERS 16,910 29,608 15,824 30,098 20,499 32,511
RESIDENTIAL TELEPHONY
- ---------------------
HOMES MARKETED 157,828 255,225 128,165 220.111 190,813 332,148
RESIDENTIAL TELEPHONY CUSTOMERS 38,038 77,015 27,906 54,564 48,110 93,500
RESIDENTIAL TELEPHONY LINES 39,400 78,839 28,026 54,820 48,229 93,756
BUSINESS TELEPHONY
- ------------------
BUSINESS TELEPHONY CUSTOMERS 1,741 3,432 1,154 2,021 1,821 3,153
BUSINESS TELEPHONY LINES 7,261 13,421 3,969 6,978 5,439 9,384
<CAPTION>
ACTUAL* PRO FORMA*
AS AT 30 JUNE AS AT 30 JUNE AS AT 30 JUNE
1996 1995 1995
---------------------- -------------------- ---------------------
<S> <C> <C> <C>
CABLE TELEVISION
- ----------------
HOMES MARKETED 2,275,793 1,166,203 1,740,471
CATV CUSTOMERS 487,079 254,672 374,014
RESIDENTIAL TELEPHONY
- ---------------------
HOMES MARKETED 2,137,784 956,191 1,475,573
RESIDENTIAL TELEPHONY CUSTOMERS 554,670 216,936 365,442
RESIDENTIAL TELEPHONY LINES 558,303 217,793 366,298
BUSINESS TELEPHONY
- ------------------
BUSINESS TELEPHONY CUSTOMERS 19,418 8,415 12,470
BUSINESS TELEPHONY LINES 60,939 27,895 34,791
AVERAGE NUMBER OF LINES PER CUSTOMER 3.1 3.3 2.8
<FN>
NOTES: * ACTUAL REFERS TO COMPARATIVE FIGURES FOR THE GROUP AS CONSTITUTED
DURING THE FIRST SIX MONTHS OF 1995 (EXCLUDING THE RESULTS OF THE
FORMER SBCC FRANCHISES). PRO FORMA REFERS TO COMPARATIVE FIGURES FOR
THE GROUP DURING THE FIRST SIX MONTHS OF 1995 INCLUDING THE RESULTS
OF THE FORMER SBCC FRANCHISES.
** THE AFFILIATED FRANCHISES INCLUDE TELEWEST'S INTERESTS IN CABLE
LONDON PLC, (49.00% INTEREST), BIRMINGHAM CABLE CORPORATION LTD
(27.47% INTEREST) AND THE CABLE CORPORATION (16.54% INTEREST).
</FN>
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
OPERATING STATISTICS - OWNED AND OPERATED FRANCHISES
AS AT 30 JUNE 1996
LONDON SOUTH AVON NORTH EAST SCOTLAND SOUTH EAST COSTWOLDS NORTH WEST MIDLANDS TOTAL
------------ ------- ---------- -------- ---------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CABLE TELEVISION
- ----------------
HOMES MARKETED 358,732 249,793 127,025 385,825 109,348 44,513 444,157 302,230 2,021,623
CATV CUSTOMERS 76,456 48,080 24,939 78,125 28,291 10,314 96,102 63,703 426,010
CATV PENETRATION 21.3% 19.2% 19.6% 20.2% 25.9% 23.2% 21.6% 21.1% 21.1%
RESIDENTIAL TELEPHONY
- ---------------------
HOMES MARKETED 315,815 249,852 123,864 299,562 109,348 44,513 442,102 302,230 1,887,286
RESIDENTIAL TELEPHONY CUSTOMERS 54,982 64,737 37,458 72,566 31,855 11,572 127,855 97,621 498,646
RESIDENTIAL TELEPHONY PENETRATION 17.4% 25.9% 30.2% 24.2% 29.1% 26.0% 28.9% 32.3% 26.4%
RESIDENTIAL TELEPHONY LINES 56,259 65,405 37,461 73,417 32,070 11,690 127,855 97,621 501,778
BUSINESS TELEPHONY
- ------------------
BUSINESS TELEPHONY CUSTOMERS 3,591 3,347 1,041 2,345 639 333 4,155 1,914 17,365
BUSINESS TELEPHONY LINES 16,135 10,491 1,941 6,351 1,995 759 9,088 5,112 51,872
AVERAGE NUMBER OF LINES PER
CUSTOMER 4.5 3.1 1.9 2.7 3.1 2.3 2.2 2.7 3.0
</TABLE>
8
<PAGE>
TELEWEST COMMUNICATIONS PLC
UK GAAP
UNAUDITED PRO FORMA CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR SIX MONTH PERIOD ENDED 30 JUNE 1996
This supplemental information is included to demonstrate the comparative effect
of including the former SBCC franchises in the results of the first six month
period 1995 on a pro forma basis.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
1996 1995 1996 1995
(pound)000 (pound)000 (pound)000 (pound)000
PRO FORMA PRO FORMA
<S> <C> <C> <C> <C>
TURNOVER
Cable television 28,799 19,691 56,872 38,314
Telephony - residential 29,349 17,931 57,324 34,486
Telephony - business 8,054 4,387 15,232 8,737
Other 2,118 1,351 4,052 2,185
-------------------- -------------------- -------------------- --------------------
68,320 43,360 133,480 83,722
OPERATING COSTS
Programming expenses (15,466) (9,718) (30,760) (18,859)
Telephony expenses (13,084) (7,032) (25,317) (15,040)
Selling, general and administrative expenses (43,109) (35,769) (84,471) (65,619)
-------------------- -------------------- -------------------- --------------------
LOSS BEFORE INTEREST, TAX, DEPRECIATION,
AND AMORTIZATION ("EBITDA") (3,339) (9,159) (7,068) (15,796)
-------------------- -------------------- -------------------- --------------------
Depreciation and amortisation (28,609) (18,750) (54,673) (37,435)
==================== ==================== ==================== ====================
OPERATING LOSS (31,948) (27,909) (61,741) (53,231)
==================== ==================== ==================== ====================
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
UK GAAP
UNAUDITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR SIX MONTH PERIOD ENDED 30 JUNE 1996
- --------------------------------------------------------------------------------
Three months Three months SIX MONTHS SIX MONTHS
ended ended ENDED ENDED
Note 30 June 30 June 30 JUNE 30 JUNE
1996 1995 1996 1995
(pound)000 (pound)000 (POUND)000 (POUND)000
<S> <C> <C> <C> <C> <C>
TURNOVER
Continuing operations 4 68,320 28,969 133,480 55,400
OPERATING COSTS 5 (100,268) (48,156) (195,221) (91,953)
-------------------- --------------------- ------------------- -------------------
OPERATING LOSS
Continuing operations (31,948) (19,187) (61,741) (36,553)
Share of results of associated
undertakings (3,934) (3,217) (7,491) (5,638)
Other interest receivable and similar
income 4,785 3,098 11,640 6,101
Interest payable and similar charges 6 (33,043) (1,479) (59,917) (2,453)
-------------------- --------------------- ------------------- -------------------
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (64,140) (20,785) (117,509) (38,543)
Tax on loss on ordinary activities (70) (2) (89) (9)
-------------------- --------------------- ------------------- -------------------
LOSS ON ORDINARY ACTIVITIES
AFTER TAXATION (64,210) (20,787) (117,598) (38,552)
Minority interests (37) (50) (54) (14)
-------------------- --------------------- ------------------- -------------------
LOSS FOR THE FINANCIAL PERIOD (64,247) (20,837) (117,652) (38,566)
==================== ===================== =================== ===================
Loss per ordinary share (pence) (6.9) (2.5) (12.7) (4.5)
==================== ===================== ================== ==================
Loss per equity share (pence) (4.5) (2.1) (8.3) (3.9)
==================== ===================== ================== ==================
<FN>
The Group had no recognised gains or losses other than those reflected in the
profit and loss account
</FN>
</TABLE>
The information set out in this document on pages 10 to 17 does not constitute
full statutory accounts within the meaning of Section 240 of the Companies Act
1985. The figures for the year ended 31 December 1995 are an extract from the
statutory accounts in respect of that period which have been delivered to the
Registrar of Companies. The auditors have issued a report under Section 235 of
the Companies Act 1985 in respect of such accounts which did not contain a
statement under Section 237(2) or (3) of the said Act, and such accounts were
reported on without qualification.
10
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
UK GAAP
UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 1996
- --------------------------------------------------------------------------------
30 June 31 December
1996 1995
(pound)000 (pound)000
<S> <C> <C>
FIXED ASSETS
Tangible assets 1,234,586 1,063,808
Investments 183,575 191,028
--------------------- -------------------------
1,418,161 1,254,836
CURRENT ASSETS
Stocks 67 40
Debtors 79,463 54,980
Cash at bank and in hand 224,382 464,818
--------------------- -------------------------
303,912 519,838
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (165,460) (137,744)
--------------------- -------------------------
NET CURRENT ASSETS 138,452 382,094
--------------------- -------------------------
TOTAL ASSETS LESS CURRENT LIABILITIES 1,556,613 1,636,930
CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (842,151) (795,066)
MINORITY INTERESTS (221) (167)
--------------------- -------------------------
NET ASSETS 714,241 841,697
===================== =========================
CAPITAL AND RESERVES
Called up share capital 142,308 141,603
Share premium 8,436 -
Merger reserve 537,150 556,095
Other reserves 270,237 270,237
Profit and loss account (243,890) (126,238)
--------------------- -------------------------
TOTAL EQUITY SHAREHOLDERS' FUNDS 714,241 841,697
===================== =========================
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
UK GAAP
Unaudited Consolidated Cash Flow Statement
for the six month period ended 30 June 1996
Six months Six months
ended ended
Note June 30 June 30
1996 1995
(pound)000 (pound)000
<S> <C> <C> <C>
NET CASH OUTFLOW FROM OPERATING ACTIVITIES 7 (5,628) (16,110)
----------------------- ----------------------
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 13,320 5,352
Interest paid (12,740) (1,511)
Interest element of finance lease rentals (1,463) (784)
----------------------- ----------------------
NET CASH (OUTFLOW)/INFLOW FROM RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE (883) 3,057
----------------------- ----------------------
INVESTING ACTIVITIES
Purchase of tangible fixed assets (196,378) (126,487)
Sale of tangible fixed assets 866 130
Purchase of subsidiary undertakings (14,098) -
Investment in associated undertakings and other participating
interests (5,000) (9,262)
----------------------- ----------------------
NET CASH OUTFLOW FROM INVESTING ACTIVITIES (214,610) (135,619)
----------------------- ----------------------
NET CASH OUTFLOW BEFORE FINANCING (221,121) (148,672)
----------------------- ----------------------
FINANCING
Cash paid for senior credit facility costs (17,780) -
Cash paid for debenture issue costs (549) -
Payment of share issue costs - (6,141)
Capital element of finance lease rental payments (860) (359)
----------------------- ----------------------
NET CASH OUTFLOW FROM FINANCING (19,189) (6,500)
----------------------- ----------------------
DECREASE IN CASH AND CASH EQUIVALENTS 8/9 (240,310) (155,172)
======================= ======================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
UK GAAP
UNAUDITED RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 1996
Six months Six months
ended ended
30 June 30 June
1996 1995
(pound)000 (pound)000
<S> <C> <C>
OPENING EQUITY SHAREHOLDERS' FUNDS 841,697 743,716
Loss for the period (117,652) (38,566)
Issue of shares 9,870 -
Goodwill written off (19,674) -
---------------------- ----------------------
CLOSING EQUITY SHAREHOLDERS' FUNDS 714,241 705,150
====================== ======================
</TABLE>
13
<PAGE>
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Telewest Communications plc (the "Company") was incorporated on 20
October 1994 under the laws of England and Wales. On 2 October 1995,
the Company acquired the whole of the issued share capital of Telewest
Communications Cable Limited, then called TeleWest Communications plc,
("Old Telewest"), in exchange for the issue of fully paid up shares of
the Company pursuant to a Court-approved scheme of arrangement (the
"Scheme of Arrangement") made between Old Telewest, the Company, and
the shareholders of Old Telewest. The Company thereby became the new
holding company for the Group. On 3 October 1995, the Company acquired
the entire issued share capital of SBC CableComms (UK) ("SBCC") by the
issue of fully paid up shares of the Company ("the SBCC Share Exchange
Agreement"). Prior to these transactions, the Company did not trade and
hence did not incur any income or expenditure on its own account. Full
details regarding the organisation and history of Old Telewest, the
Scheme of Arrangement, and the SBCC Share Exchange Agreement can be
found in the 1995 Annual Report.
The Group financial statements consolidate the financial statements of
the Company and its subsidiary undertakings, together with associated
undertakings to the extent of the Group's interests in those
undertakings. The principles of merger accounting have been adopted in
respect of the effective acquisition of Old Telewest. The consolidated
results are presented as if Old Telewest had been owned by the Company
throughout the comparative accounting period. The acquisition method of
accounting has been adopted in respect of all other acquisitions and
therefore the consolidated profit and loss account reflects the results
of the acquired subsidiary undertakings and the Group's share of the
results of associated undertakings for the period.
The consolidated financial statements, which are unaudited, have been
prepared on the basis of the accounting policies set out in the Group's
1995 Annual Report. The balance sheet at 31 December 1995 is derived
from the statutory accounts for 1995 which have been delivered to the
Registrar of Companies. The auditors have reported on those accounts;
their report was unqualified and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.
2. ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS
The Group uses foreign currency options which permit, but do not
require, the Group to exchange foreign currencies at a future date with
another party at a contracted exchange rate (the "Forward Rate"). Such
contracts are used to hedge against adverse changes in foreign currency
exchange rates associated with obligations denominated in foreign
currency. The premium paid to enter into these options is included on
the balance sheet as a fixed asset investment and is amortised to the
profit and loss account over the life of the option at a constant rate
to the carrying value of the obligation it hedges. The difference
between the contracted amount to be exchanged under the option
translated at the Forward Rate and the contracted amount translated at
the spot rate at the inception of the contract is also amortised to the
profit and loss account over the life of the option at a constant rate
to the carrying value of the obligation. The carrying value of the
obligation is increased for the amortised portion of the difference.
The Group also enters into combined foreign currency and interest rate
swap contracts ("Foreign Currency Swaps") under which the Company
exchanges principal amounts of foreign currencies with another party at
an agreed exchange rate and, at maturity, re-exchanges the principal
amounts at an exchange rate agreed at the outset of the transaction.
Over the term of the Foreign Currency Swap, the Company and the swap
counterparty also exchange payments equivalent to interest in
different currencies in respect of the principal amounts exchanged.
Such contracts are used to hedge against adverse changes in foreign
currency exchange rates associated with certain obligations denominated
in foreign currency. The principal element of Foreign Currency Swaps is
translated at the spot rate at the reporting date with any gain or loss
on translation recognised in the profit and loss account. Such gains
and losses are offset against gains and losses arising on the
translation of the obligations which have been hedged.
14
<PAGE>
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS (CONTINUED)
The interest element of Foreign Currency Swaps is accounted for on an
accruals basis with the net interest income or expense recognised in
the profit and loss account as it is earned and payable.
3. DEPRECIATION
The estimated useful lives of certain assets within system electronics
and cable and ducting were re-assessed with effect from 1 January 1996
and have been changed from 10 years and 30 years to 8 years and 25
years, respectively. These assets will be written off over their
revised estimated remaining lives. The change in asset lives does not
have a material effect on the current period financial statements.
4. TURNOVER
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
1996 1995 1996 1995
(pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C>
Cable television 28,799 13,369 56,872 25,873
Telephony - residential 29,349 10,595 57,324 20,205
Telephony - business 8,054 3,654 15,232 7,137
Other 2,118 1,351 4,052 2,185
------------------- ----------------- ------------------- ----------------
68,320 28,969 133,480 55,400
=================== ================= =================== ================
</TABLE>
5. OPERATING COSTS
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
1996 1995 1996 1995
(pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C>
Programming expenses 15,466 6,158 30,760 11,975
Telephony expenses 13,084 4,248 25,317 9,515
Selling, general and
administrative 43,109 25,945 84,471 46,200
Depreciation and
amortisation 28,609 11,805 54,673 24,263
------------------- ----------------- ------------------ -----------------
100,268 48,156 195,221 91,953
=================== ================= ================== =================
</TABLE>
15
<PAGE>
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
1996 1995 1996 1995
(pound)000 (pound)000 (POUND)000 (POUND)000
<S> <C> <C> <C> <C>
On bank loans and overdrafts and other loans
wholly repayable within 5 years 309 1,039 1,259 1,669
Write off of loan arrangement fees relating to credit
facility refinanced 4,067 - 4,067 -
Finance costs of Senior Discount Debentures 14,847 - 29,089 -
Finance costs of Senior Debentures 5,641 - 11,278 -
Finance charges payable in respect of finance
leases and hire purchase contracts 776 440 1,463 784
Exchange losses on foreign currency translation,
net 7,403 - 12,761 -
---------------- ----------------- ----------------- ----------------
33,043 1,479 59,917 2,453
================ ================= ================= ================
</TABLE>
The accounting treatment of the hedging instruments associated with the
Senior Discount Debentures and the Senior Debentures is described in
note 2 to the unaudited consolidated financial statements.
7. RECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING
ACTIVITIES
<TABLE>
<CAPTION>
Six months Six months
ended ended
30 June 30 June
1996 1995
(pound)000 (pound)000
<S> <C> <C>
Operating loss (61,741) (36,553)
Depreciation and amortisation 54,673 24,263
Increase in stocks (27) (14)
Increase in debtors (10,405) (4,192)
Increase in other creditors 11,872 386
----------------- ---------------
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (5,628) (16,110)
================= ===============
</TABLE>
16
<PAGE>
TELEWEST COMMUNICATIONS PLC
UK GAAP
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS FOR THE SIX MONTHS TO
30 JUNE 1996
Cash
(pound)000
Balance at 1 January 1996 464,818
Net cash outflow before foreign exchange (240,310)
Foreign exchange movement on cash (126)
-----------------
BALANCE AT 30 JUNE 1996 224,382
=================
9. ANALYSIS OF CHANGES IN CASH AND CASH EQUIVALENTS FOR THE SIX MONTHS TO
30 JUNE 1995
<TABLE>
<CAPTION>
Cash Overdraft Net
(pound)000 (pound)000 (pound)000
<S> <C> <C> <C>
Balance at 1 January 1995 248,002 - 248,002
Net cash outflow (154,351) (821) (155,172)
----------------- ----------------- -----------------
BALANCE AT 30 JUNE 1995 93,651 (821) 92,830
================= ================= =================
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
The Company is party to various legal proceedings in the ordinary
course of business which it does not believe will result, in aggregate,
in a material adverse effect on its financial condition.
11. BANK FINANCING
A subsidiary of the Company is party to a senior secured credit
facility which, subject to satisfaction of certain conditions, will be
available for future drawdowns. The facility will be available to
finance the capital expenditure, working capital, and other related
requirements for the construction and operation of all the Company's
owned and operated franchises, to pay cash interest on the Company's
unsecured debentures, to fund the repayment of existing secured
borrowings in respect of the London South, Avon and Scotland Franchise
Areas, to fund loans to or investments in affiliated companies, to bid
for or purchase, and subsequently construct, any licences or franchises
which may become available and to refinance advances and the payment of
interest, fees and expenses in respect of the Senior Secured Facilty.
The facility is divided into two tranches: the first portion (Tranche
A) will be available on a revolving basis for up to (pound)300 million,
reducing to (pound)100 million by 30 June 1998 with full repayment by
31 December 1998; the second portion (Tranche B) will be available on a
revolving basis concurrently with Tranche A for an amount up to 6.5
times the trailing, rolling six month annualised consolidated net
operating cash flow, gradually reducing throughout the period of the
facility to 4 times by 1 January 2000. Thereafter, the amount
outstanding under the facility converts to a term loan amortising over
5 years. The aggregate drawing at any time under both tranches cannot
exceed (pound)1.2 billion.
Borrowings under the facility are secured by assets including the
partnership interests and shares in subsidiaries of the Company and
bear interest at 2.25% above LIBOR for Tranche A and between 0.5% and
1.875% above LIBOR for Tranche B. The facility contains covenants
regarding financial and operating ratios and targets.
17
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
RECONCILIATION OF LOSS FOR THE FINANCIAL PERIOD UNDER UK GAAP TO NET LOSS UNDER
US GAAP FOR THE SIX MONTH PERIOD ENDED 30 JUNE 1996
- --------------------------------------------------------------------------------
Three months Three months Six months Six months
ended ended ended ended
30 June 30 June 30 June 30 June
1996 1995 1996 1995
(pound)000 (pound)000 (pound)000 (pound)000
<S> <C> <C> <C> <C>
LOSS FOR THE FINANCIAL PERIOD UNDER UK GAAP (64,247) (20,837) (117,652) (38,566)
Adjustments:
Reversal of amortisation of interest rate swaps - 502 - 1,004
Amortisation of goodwill (6,569) (524) (13,014) (1,049)
Foreign exchange loss on financial instruments (23,599) - (34,907) -
Finance charges on Senior Discount Debentures (2,646) - (5,116) -
Reduction in fair value of interest rate swaps - (2,688) - (5,249)
Other (19) - (38) -
------------------- ------------------ ----------------- ------------------
Net loss under US GAAP (97,080) (23,547) (170,727) (43,860)
=================== ================== ================= ==================
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
3 months 3 months 3 months 6 months 6 months 6 months
ended ended ended ended ended ended
June 30 June 30 June 30 June 30 June 30 June 30
1996 1996 1995 1996 1996 1995
(note 1) (note 1)
<S> <C> <C> <C> <C> <C> <C>
REVENUE
Cable television $ 44,722 (pound) 28,799(pound)13,369 $ 88,317 (pound) 56,872 (pound) 25,873
Telephony - residential 45,576 29,349 10,595 89,018 57,324 20,205
Telephony - business 12,507 8,054 3,654 23,654 15,232 7,137
Other ((pound)814 and (pound)571 in
1996 and 1995 from related parties) 3,289 2,118 1,351 6,292 4,052 2,185
---------------- -------------- ------------ -------------- ----------------- ---------------
106,094 68,320 28,969 207,281 133,480 55,400
---------------- -------------- ------------ -------------- ----------------- ---------------
OPERATING COSTS AND EXPENSES
Programming (24,017) (15,466) (6,158) (47,767) (30,760) (11,975)
Telephony (20,318) (13,084) (4,248) (39,315) (25,317) (9,515)
Selling, general and administrative
(including (pound)1,216 and(pound)1,349
in 1996 and 1995 from related parties) (66,973) (43,128) (25,945) (131,234) (84.509) (46,200)
Depreciation (44,427) (28,609) (11,303) (84,902) (54,673) (23,259)
Amortization of goodwill (10,201) (6,569) (524) (20,209) (13,014) (1,049)
---------------- -------------- ------------ -------------- ----------------- ---------------
(165,936) (106,856) (48,178) (323,427) (208,273) (91,998)
---------------- -------------- ------------ -------------- ----------------- ---------------
OPERATING LOSS (59,842) (38,536) (19,209) (116,146) (74,793) (36,598)
OTHER INCOME/(EXPENSE)
Interest income ((pound)846
and (pound)660 in 1996
and 1995 from related parties) 7,246 4,666 3,062 17,830 11,482 6,065
Interest expense and similar charges (43,925) (28,286) (1,474) (81,173) (52,272) (2,453)
Unrealized loss on interest rate swaps - - (2,688) - - (5,249)
Foreign exchange losses, net (48,143) (31,002) - (74,024) (47,668) -
Share of net losses of affiliates (6,109) (3,934) (3,217) (11,633) (7,491) (5,638)
Gain on disposal of assets 185 119 36 245 158 36
Minority interests in profits of
consolidated subsidiaries, net (57) (37) (50) (84) (54) (14)
Other, net - - (5) - - -
---------------- ------------- ------------- -------------- ---------------- ---------------
LOSS BEFORE INCOME TAXES (150,645) (97,010) (23,545) (264,985) (170,638) (43,851)
Income tax expense (109) (70) (2) (138) (89) (9)
---------------- ------------- ------------- -------------- ---------------- ---------------
NET LOSS $ (150,754)(pound)(97,080)(pound)(23,547)$ (265,123) (pound)(170,727)(pound) (43,860)
================ ============= ============= ============== ================ ===============
Loss per ordinary share
(dollars/pound) (note 5) $ (0.16)(pound) (0.10) (pound)(0.03) $ (0.29) (pound) (0.18)(pound) (0.05)
================ ============= ============= ============== ================ ===============
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
19
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
June 30 June 30 December 31
1996 1996 1995
(note 1)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 348,443 (pound) 224,382 (pound) 464,818
Trade receivables (net of allowance for doubtful accounts of(pound)5,427
and (pound)4,695) 42,719 27,509 23,123
Other receivables 45,986 29,613 25,657
Prepaid expenses 6,965 4,485 6,133
Investments in affiliates, accounted for under the equity method, and
related receivables 116,586 75,076 80,703
Other investments, at cost 39,857 25,666 20,666
Property and equipment (less accumulated depreciation of (pound)235,935
and (pound)182,142) 1,917,189 1,234,586 1,063,808
Goodwill (less accumulated amortization of(pound)24,772 and(pound)11,758) 780,396 502,541 495,881
Other assets (less accumulated amortization of(pound)1,538 and(pound)742) 127,664 82,210 108,931
--------------- ---------------- ----------------
TOTAL ASSETS $ 3,425,805 (pound) 2,206,068 (pound) 2,289,720
=============== ================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 53,634 (pound) 34,538 (pound) 40,402
Other liabilities 216,932 139,695 103,824
Debt 1,281,209 825,043 792,265
Capital lease obligations 68,848 44,335 30,314
--------------- ---------------- ----------------
TOTAL LIABILITIES 1,620,623 1,043,611 966,805
--------------- ---------------- ----------------
Minority interests 343 221 167
--------------- ---------------- ----------------
Shareholders' equity
Convertible preference shares, 10 pence par value;
661,000,000 shares authorized in 1996 and 1995; 77,035 49,607 49,607
496,066,708 shares issued and outstanding in 1996 and 1995
Ordinary shares, 10 pence par value;
2,010,000,000 shares authorized in 1996 and 1995;
927,010,883 and 919,963,400 shares issued and outstanding in 1996 and
1995 respectively 143,955 92,701 91,996
Additional paid-in capital 2,068,677 1,332,136 1,322,971
Accumulated deficit (482,088) (310,444) (139,717)
--------------- ---------------- ----------------
1,807,579 1,164,000 1,324,857
Ordinary shares held in trust for the Telewest Restricted Share Scheme (2,740) (1,764) (2,109)
--------------- ---------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 1,804,839 1,162,236 1,322,748
--------------- ---------------- ----------------
Commitment and contingencies (note 6) - - -
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,425,805 (pound) 2,206,068 (pound) 2,289,720
=============== ================ ================
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
20
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
6 months 6 months 6 months
ended ended ended
June 30 June 30 June 30
1996 1996 1995
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (265,123) (pound) (170,727) (pound) (43,860)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 84,902 54,673 23,259
Amortization of goodwill 20,209 13,014 1,049
Amortization of deferred financing costs and issue discount
on senior discount debentures 60,016 38,648 -
Unrealized loss on foreign currency translation 74,024 47,668 -
Unrealized loss on interest rate swap - - 5,249
Share of losses of affiliates 11,633 7,491 5,638
Gain on disposals of assets (245) (158) (36)
Minority interests in profit 84 54 14
Changes in operating assets and liabilities, net of effect of acquisition of
subsidiaries:
Change in receivables (15,965) (10,281) (3,955)
Change in prepaid expenses 2,519 1,622 (966)
Change in accounts payable (11,369) (7,321) (6,113)
Change in other liabilities 29,204 18,806 7,489
--------------- --------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES (10,111) (6,511) (12,232)
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property and equipment (304,954) (196,378) (126,487)
Cash paid for acquisition of subsidiaries (21,893) (14,098) -
Additions to other investments (7,765) (5,000) (9,262)
Proceeds from disposals of assets 1,345 866 130
--------------- --------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES (333,267) (214,610) (135,619)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for credit facility arrangement costs (27,611) (17,780) -
Cash paid for debenture issue costs (853) (549) -
Cash paid for share issue costs - - (6,141)
Capital element of finance lease repayments (1,335) (860) (359)
--------------- --------------- ---------------
NET CASH USED IN FINANCING ACTIVITIES (29,799) (19,189) (6,500)
--------------- --------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (373,177) (240,310) (154,351)
Effect of exchange rate changes on cash and cash equivalents (196) (126) -
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 721,816 464,818 248,002
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 348,443 (pound) 224,382 (pound) 93,651
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest during the period $ 22,056 (pound) 14,203 (pound) 2,295
=============== =============== ===============
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
21
<PAGE>
<TABLE>
<CAPTION>
TELEWEST COMMUNICATIONS PLC
US GAAP
UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
- ----------------------------------------------------------------------------------------
Convertible Ordinary Shares held Additional Accumulated TOTAL
preference shares in trust paid-in deficit
shares capital
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 (pound)49,607 (pound) 91,996 (pound)(2,109) (pound)1,322,971 (pound)(139,717) (pound)1,322,748
Issue of shares - 705 - 9,165 - 9,870
Accrued employee compensation
relating to the Telewest
Restricted Share Scheme
- - 345 - - 345
Net loss for the period to
June 30, 1996 - - - - (170,727) (170,727)
------------- -------------- -------------- -------------- ---------------- --------------
BALANCE AT JUNE 30, 1996 (pound)49,607 (pound) 92,701 (pound)(1,764) (pound)1,332,136 (pound)(310,444) (pound)1,162,236
============= ============== ============== ============== ================ ==============
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements
22
<PAGE>
TELEWEST COMMUNICATIONS PLC
US GAAP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
Telewest Communications plc (the "Company") was incorporated on October
20, 1994 under the laws of England and Wales. On October 2, 1995, the
Company acquired the whole of the issued share capital of Telewest
Communications Cable Limited, then called TeleWest Communications plc,
("Old Telewest"), in exchange for the issue of fully paid up shares of
the Company pursuant to a Court-approved scheme of arrangement (the
"Scheme of Arrangement") made between Old Telewest, the Company, and
the shareholders of Old Telewest. Details regarding the organization
and history of Old Telewest and the Scheme of Arrangement can be found
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 filed with the Securities and Exchange Commission
(the "1995 Annual Report").
On October 3, 1995, immediately following the completion of the Scheme
of the Arrangement, the Company acquired the entire issued share
capital of SBC CableComms (UK) ("SBCC"), a company that holds cable
television and telephony interests in the United Kingdom ("UK"), from
its former shareholders in exchange for fully paid up shares of the
Company. Details regarding the acquisition can be found in the 1995
Annual Report.
The unaudited condensed consolidated financial statements of the
Company and its majority owned subsidiaries (and, where appropriate,
their predecessor companies, collectively, the "Telewest Group") have
been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations.
As the currency in which the Company operates is UK pounds sterling and
the economic environment in which the Company operates is the UK, the
financial statements are stated in pounds sterling ((pound)). Merely
for convenience, the financial statements contain translations of
certain pounds sterling amounts into US dollars at $1.5529 per
(pound)1.00, the Noon Buying Rate of the Federal Reserve Bank of New
York on June 28, 1996.
2. RESPONSIBILITY FOR INTERIM FINANCIAL STATEMENTS
The condensed consolidated financial statements as of and for the
periods ended June 30, 1995 and 1996 are unaudited; however, in the
opinion of the management, such statements include all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation of the results of operations for the interim periods
presented. The results of operations for any interim period are not
necessarily indicative of the results of the full year. The unaudited
condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the 1995 Annual Report.
3. ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS
The Company uses foreign currency option contracts which permit, but do
not require, the Company to exchange foreign currencies at a future
date with another party at a contracted exchange rate. The Company
also enters into combined foreign currency and interest rate swap
contracts ("Foreign Currency Swaps") under which the Company exchanges
principal amounts of foreign currencies with another party at an agreed
exchange rate and, at maturity, re-exchanges the principal amounts at
an exchange rate agreed at the outset of the transaction. Over the term
of the Foreign Currency Swap, the Company and the swap counterparty
also exchange payments equivalent to interest in different currencies
in respect of the principal amounts exchanged. The Foreign Currency
Options and Foreign Currency Swaps are used to hedge against adverse
changes in foreign currency exchange rates associated with certain
obligations denominated in foreign currency.
23
<PAGE>
TELEWEST COMMUNICATIONS PLC
US GAAP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ACCOUNTING POLICIES - FINANCIAL INSTRUMENTS (CONTINUED)
The foreign currency option and the Foreign Currency Swaps are recorded
on the balance sheet in 'other assets' or 'other liabilities' at their
fair value at the end of each reporting period with changes in their
fair value during the reporting period being reported as part of the
foreign exchange gain or loss in the Statement of Operations. Such
gains and losses are offset against foreign exchange gains and losses
on the obligations denominated in foreign currencies which have been
hedged.
4. DEPRECIATION
The estimated useful lives of certain assets within system electronics
and cable and ducting were reassessed with effect from January 1, 1996
and have been changed from 10 years and 30 years to 8 years and 25
years, respectively. These assets will be written off over their
revised estimated remaining lives. The change in asset lives does not
have a material effect on the current period financial statements.
5. LOSS PER ORDINARY SHARE
Loss per ordinary share is based on the weighted average number of
ordinary shares outstanding for the period of 923,487,142 shares.
6. COMMITMENTS AND CONTINGENCIES
The Company is party to various legal proceedings in the ordinary
course of business which it does not believe will result, in aggregate,
in a material adverse effect on its balance sheet position and its
results.
7. BANK FINANCING
A subsidiary of the Company is party to a senior secured credit
facility which, subject to satisfaction of certain conditions, will be
available for future drawdowns. The facility will be available to
finance the capital expenditure, working capital, and other related
requirements for the construction and operation of all the Company's
owned and operated franchises, to pay cash interest on the Company's
unsecured debentures, to fund the repayment of existing secured
borrowings in respect of the London South, Avon and Scotland Franchise
areas, to fund loans to or investments in affiliated companies, to bid
for or purchase, and subsequently construct, any licences or
franchises which may become available and to refinance advances and
the payment of interest, fees and expenses in respect of the Senior
Secured Facilty
The facility is divided into two tranches: the first portion (Tranche
A) will be available on a revolving basis for up to (pound)300 million,
reducing to (pound)100 million by June 30, 1998 with full repayment by
December 31, 1998; the second portion (Tranche B) will be available on
a revolving basis concurrently with Tranche A for an amount up to 6.5
times the trailing, rolling six month annualized consolidated net
operating cash flow, gradually reducing throughout the period of the
facility to 4 times by January 1, 2000. Thereafter, the amount
outstanding under the facility converts to a term loan amortizing over
5 years. The aggregate drawing at any time under both tranches cannot
exceed (pound)1.2 billion.
Borrowings under the facility are secured by assets including the
partnership interests and shares in subsidiaries of the Company and
bear interest at 2.25% above LIBOR for Tranche A and between 0.5% and
1.875% above LIBOR for Tranche B. The facility contains covenants
regarding financial and operating ratios and targets.
24
